Correlation Between Bowler Metcalf and Avi

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

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

Diversification Opportunities for Bowler Metcalf and Avi

0.19

Correlation Coefficient

Bowler Metcalf  Avi

Average diversification

The 3 months correlation between Bowler and Avi is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bowler Metcalf and Avi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avi and Bowler Metcalf 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 Bowler Metcalf are associated (or correlated) with Avi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avi has no effect on the direction of Bowler Metcalf i.e., Bowler Metcalf and Avi go up and down completely randomly.

Pair Corralation between Bowler Metcalf and Avi

Assuming the 90 days trading horizon Bowler Metcalf is expected to generate 5.55 times more return on investment than Avi. However, Bowler Metcalf is 5.55 times more volatile than Avi. It trades about 0.05 of its potential returns per unit of risk. Avi is currently generating about 0.06 per unit of risk. If you would invest  108,100  in Bowler Metcalf on October 13, 2024 and sell it today you would earn a total of  28,100  from holding Bowler Metcalf or generate 25.99% return on investment over 90 days.

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

Bowler Metcalf  vs.  Avi

Bowler Metcalf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowler Metcalf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bowler Metcalf is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Avi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Avi is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bowler Metcalf and Avi

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

The idea behind Bowler Metcalf and Avi 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 Transaction History module to view history of all your transactions and understand their impact on performance.