Correlation Between ARDAGH METAL and Palo Alto

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and Palo Alto 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 Palo Alto 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 Palo Alto Networks, you can compare the effects of market volatilities on ARDAGH METAL and Palo Alto 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 Palo Alto. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and Palo Alto.

Diversification Opportunities for ARDAGH METAL and Palo Alto

-0.04

Correlation Coefficient

ARDAGH METAL  Palo Alto

Good diversification

The 3 months correlation between ARDAGH and Palo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and Palo Alto Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palo Alto Networks 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 Palo Alto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palo Alto Networks has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and Palo Alto go up and down completely randomly.

Pair Corralation between ARDAGH METAL and Palo Alto

Assuming the 90 days horizon ARDAGH METAL is expected to generate 10.99 times less return on investment than Palo Alto. In addition to that, ARDAGH METAL is 1.46 times more volatile than Palo Alto Networks. It trades about 0.01 of its total potential returns per unit of risk. Palo Alto Networks is currently generating about 0.09 per unit of volatility. If you would invest  6,714  in Palo Alto Networks on October 11, 2024 and sell it today you would earn a total of  10,516  from holding Palo Alto Networks or generate 156.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ARDAGH METAL PACDL 0001  vs.  Palo Alto Networks

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 fragile 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.

Palo Alto Networks

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Palo Alto Networks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Palo Alto is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ARDAGH METAL and Palo Alto

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

The idea behind ARDAGH METAL PACDL 0001 and Palo Alto Networks 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.