Correlation Between Amer Sports, and Installed Building

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

By analyzing existing cross correlation between Amer Sports, and Installed Building Products, you can compare the effects of market volatilities on Amer Sports, and Installed Building 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 Amer Sports, with a short position of Installed Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Sports, and Installed Building.

Diversification Opportunities for Amer Sports, and Installed Building

-0.76

Correlation Coefficient

Amer Sports,  Installed Building

Pay attention - limited upside

The 3 months correlation between Amer and Installed is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amer Sports, and Installed Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Installed Building and Amer Sports, 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 Amer Sports, are associated (or correlated) with Installed Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Installed Building has no effect on the direction of Amer Sports, i.e., Amer Sports, and Installed Building go up and down completely randomly.

Pair Corralation between Amer Sports, and Installed Building

Allowing for the 90-day total investment horizon Amer Sports, is expected to generate 1.24 times less return on investment than Installed Building. But when comparing it to its historical volatility, Amer Sports, is 1.03 times less risky than Installed Building. It trades about 0.21 of its potential returns per unit of risk. Installed Building Products is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  17,821  in Installed Building Products on October 23, 2024 and sell it today you would earn a total of  1,779  from holding Installed Building Products or generate 9.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Amer Sports,  vs.  Installed Building Products

Amer Sports,

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Sports, are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amer Sports, unveiled solid returns over the last few months and may actually be approaching a breakup point.

Installed Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Installed Building Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Amer Sports, and Installed Building

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

The idea behind Amer Sports, and Installed Building Products 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.