Correlation Between Affluence and American Picture

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

By analyzing existing cross correlation between Affluence and American Picture House, you can compare the effects of market volatilities on Affluence and American Picture 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 Affluence with a short position of American Picture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affluence and American Picture.

Diversification Opportunities for Affluence and American Picture

0.02

Correlation Coefficient

Affluence  American Picture

Significant diversification

The 3 months correlation between Affluence and American is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Affluence and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House and Affluence 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 Affluence are associated (or correlated) with American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Affluence i.e., Affluence and American Picture go up and down completely randomly.

Pair Corralation between Affluence and American Picture

Given the investment horizon of 90 days Affluence is expected to under-perform the American Picture. In addition to that, Affluence is 2.92 times more volatile than American Picture House. It trades about -0.01 of its total potential returns per unit of risk. American Picture House is currently generating about 0.06 per unit of volatility. If you would invest  22.00  in American Picture House on December 23, 2024 and sell it today you would earn a total of  3.00  from holding American Picture House or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Affluence  vs.  American Picture House

Affluence

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affluence has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

American Picture House

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Picture House are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, American Picture reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Affluence and American Picture

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

The idea behind Affluence and American Picture House 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.