Correlation Between National Aerospace and TBI Motion
Can any of the company-specific risk be diversified away by investing in both National Aerospace and TBI Motion at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Aerospace and TBI Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Aerospace Fasteners and TBI Motion Technology, you can compare the effects of market volatilities on National Aerospace and TBI Motion and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in National Aerospace with a short position of TBI Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Aerospace and TBI Motion.
Diversification Opportunities for National Aerospace and TBI Motion
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and TBI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding National Aerospace Fasteners and TBI Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBI Motion Technology and National Aerospace is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on National Aerospace Fasteners are associated (or correlated) with TBI Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBI Motion Technology has no effect on the direction of National Aerospace i.e., National Aerospace and TBI Motion go up and down completely randomly.
Pair Corralation between National Aerospace and TBI Motion
Assuming the 90 days trading horizon National Aerospace is expected to generate 31.0 times less return on investment than TBI Motion. But when comparing it to its historical volatility, National Aerospace Fasteners is 3.13 times less risky than TBI Motion. It trades about 0.03 of its potential returns per unit of risk. TBI Motion Technology is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,040 in TBI Motion Technology on September 23, 2024 and sell it today you would earn a total of 1,330 from holding TBI Motion Technology or generate 32.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
National Aerospace Fasteners vs. TBI Motion Technology
Performance |
Timeline |
National Aerospace |
TBI Motion Technology |
National Aerospace and TBI Motion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Aerospace and TBI Motion
The main advantage of trading using opposite National Aerospace and TBI Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Aerospace position performs unexpectedly, TBI Motion can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TBI Motion will offset losses from the drop in TBI Motion's long position.National Aerospace vs. Yang Ming Marine | National Aerospace vs. Evergreen Marine Corp | National Aerospace vs. Eva Airways Corp | National Aerospace vs. U Ming Marine Transport |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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