Correlation Between BROADWIND ENRGY and American Woodmark
Can any of the company-specific risk be diversified away by investing in both BROADWIND ENRGY and American Woodmark 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 BROADWIND ENRGY and American Woodmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BROADWIND ENRGY and American Woodmark, you can compare the effects of market volatilities on BROADWIND ENRGY and American Woodmark 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 BROADWIND ENRGY with a short position of American Woodmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADWIND ENRGY and American Woodmark.
Diversification Opportunities for BROADWIND ENRGY and American Woodmark
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BROADWIND and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and American Woodmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Woodmark and BROADWIND ENRGY 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 BROADWIND ENRGY are associated (or correlated) with American Woodmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Woodmark has no effect on the direction of BROADWIND ENRGY i.e., BROADWIND ENRGY and American Woodmark go up and down completely randomly.
Pair Corralation between BROADWIND ENRGY and American Woodmark
Assuming the 90 days trading horizon BROADWIND ENRGY is expected to generate 2.12 times more return on investment than American Woodmark. However, BROADWIND ENRGY is 2.12 times more volatile than American Woodmark. It trades about 0.13 of its potential returns per unit of risk. American Woodmark is currently generating about -0.23 per unit of risk. If you would invest 176.00 in BROADWIND ENRGY on October 9, 2024 and sell it today you would earn a total of 34.00 from holding BROADWIND ENRGY or generate 19.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BROADWIND ENRGY vs. American Woodmark
Performance |
Timeline |
BROADWIND ENRGY |
American Woodmark |
BROADWIND ENRGY and American Woodmark Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BROADWIND ENRGY and American Woodmark
The main advantage of trading using opposite BROADWIND ENRGY and American Woodmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROADWIND ENRGY position performs unexpectedly, American Woodmark 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 American Woodmark will offset losses from the drop in American Woodmark's long position.BROADWIND ENRGY vs. SUN LIFE FINANCIAL | BROADWIND ENRGY vs. UNIQA INSURANCE GR | BROADWIND ENRGY vs. JSC Halyk bank | BROADWIND ENRGY vs. REVO INSURANCE SPA |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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