Correlation Between ARDAGH METAL and PLAYMATES TOYS

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and PLAYMATES TOYS 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 ARDAGH METAL and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and PLAYMATES TOYS, you can compare the effects of market volatilities on ARDAGH METAL and PLAYMATES TOYS 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 ARDAGH METAL with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and PLAYMATES TOYS.

Diversification Opportunities for ARDAGH METAL and PLAYMATES TOYS

0.3

Correlation Coefficient

ARDAGH METAL  PLAYMATES TOYS

Weak diversification

The 3 months correlation between ARDAGH and PLAYMATES is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and PLAYMATES TOYS go up and down completely randomly.

Pair Corralation between ARDAGH METAL and PLAYMATES TOYS

Assuming the 90 days horizon ARDAGH METAL is expected to generate 30.2 times less return on investment than PLAYMATES TOYS. But when comparing it to its historical volatility, ARDAGH METAL PACDL 0001 is 1.57 times less risky than PLAYMATES TOYS. It trades about 0.0 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.38  in PLAYMATES TOYS on October 10, 2024 and sell it today you would earn a total of  5.22  from holding PLAYMATES TOYS or generate 378.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ARDAGH METAL PACDL 0001  vs.  PLAYMATES TOYS

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PLAYMATES TOYS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PLAYMATES TOYS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ARDAGH METAL and PLAYMATES TOYS

The main advantage of trading using opposite ARDAGH METAL and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARDAGH METAL position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.

The idea behind ARDAGH METAL PACDL 0001 and PLAYMATES TOYS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.