Correlation Between Aquagold International and Cummins
Can any of the company-specific risk be diversified away by investing in both Aquagold International and Cummins 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 Aquagold International and Cummins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and Cummins, you can compare the effects of market volatilities on Aquagold International and Cummins 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 Aquagold International with a short position of Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Cummins.
Diversification Opportunities for Aquagold International and Cummins
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aquagold and Cummins is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins and Aquagold International 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 Aquagold International are associated (or correlated) with Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Aquagold International i.e., Aquagold International and Cummins go up and down completely randomly.
Pair Corralation between Aquagold International and Cummins
Given the investment horizon of 90 days Aquagold International is expected to under-perform the Cummins. In addition to that, Aquagold International is 8.4 times more volatile than Cummins. It trades about -0.17 of its total potential returns per unit of risk. Cummins is currently generating about -0.08 per unit of volatility. If you would invest 37,654 in Cummins on December 4, 2024 and sell it today you would lose (2,922) from holding Cummins or give up 7.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.77% |
Values | Daily Returns |
Aquagold International vs. Cummins
Performance |
Timeline |
Aquagold International |
Cummins |
Aquagold International and Cummins Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aquagold International and Cummins
The main advantage of trading using opposite Aquagold International and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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