Correlation Between Avalon Holdings and Dun Bradstreet

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

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

Diversification Opportunities for Avalon Holdings and Dun Bradstreet

0.63

Correlation Coefficient

Avalon Holdings  Dun Bradstreet

Poor diversification

The 3 months correlation between Avalon and Dun is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and Dun Bradstreet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dun Bradstreet Holdings and Avalon Holdings 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 Avalon Holdings are associated (or correlated) with Dun Bradstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dun Bradstreet Holdings has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and Dun Bradstreet go up and down completely randomly.

Pair Corralation between Avalon Holdings and Dun Bradstreet

Considering the 90-day investment horizon Avalon Holdings is expected to generate 1.66 times more return on investment than Dun Bradstreet. However, Avalon Holdings is 1.66 times more volatile than Dun Bradstreet Holdings. It trades about -0.04 of its potential returns per unit of risk. Dun Bradstreet Holdings is currently generating about -0.2 per unit of risk. If you would invest  335.00  in Avalon Holdings on December 26, 2024 and sell it today you would lose (43.51) from holding Avalon Holdings or give up 12.99% of portfolio value over 90 days.

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

Avalon Holdings  vs.  Dun Bradstreet Holdings

Avalon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avalon Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dun Bradstreet Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dun Bradstreet Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Avalon Holdings and Dun Bradstreet

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

The idea behind Avalon Holdings and Dun Bradstreet Holdings 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.