Correlation Between ARDAGH METAL and Watsco

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

Diversification Opportunities for ARDAGH METAL and Watsco

0.15

Correlation Coefficient

ARDAGH METAL  Watsco

Average diversification

The 3 months correlation between ARDAGH and Watsco is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and Watsco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watsco Inc 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 Watsco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watsco Inc has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and Watsco go up and down completely randomly.

Pair Corralation between ARDAGH METAL and Watsco

Assuming the 90 days horizon ARDAGH METAL is expected to generate 11.01 times less return on investment than Watsco. In addition to that, ARDAGH METAL is 2.16 times more volatile than Watsco Inc. It trades about 0.0 of its total potential returns per unit of risk. Watsco Inc is currently generating about 0.09 per unit of volatility. If you would invest  22,040  in Watsco Inc on September 23, 2024 and sell it today you would earn a total of  24,300  from holding Watsco Inc or generate 110.25% return on investment over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  Watsco Inc

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 nearly stable basic indicators, ARDAGH METAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Watsco Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Watsco Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Watsco is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ARDAGH METAL and Watsco

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

The idea behind ARDAGH METAL PACDL 0001 and Watsco Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.