Correlation Between Continental and ARDAGH METAL

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

By analyzing existing cross correlation between Camden Property Trust and ARDAGH METAL PACDL 0001, you can compare the effects of market volatilities on Continental and ARDAGH METAL 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 Continental with a short position of ARDAGH METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and ARDAGH METAL.

Diversification Opportunities for Continental and ARDAGH METAL

0.11

Correlation Coefficient

Continental  ARDAGH METAL

Average diversification

The 3 months correlation between Continental and ARDAGH is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Camden Property Trust and ARDAGH METAL PACDL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARDAGH METAL PACDL and Continental 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 Camden Property Trust are associated (or correlated) with ARDAGH METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARDAGH METAL PACDL has no effect on the direction of Continental i.e., Continental and ARDAGH METAL go up and down completely randomly.

Pair Corralation between Continental and ARDAGH METAL

Assuming the 90 days horizon Camden Property Trust is expected to generate 0.27 times more return on investment than ARDAGH METAL. However, Camden Property Trust is 3.66 times less risky than ARDAGH METAL. It trades about -0.3 of its potential returns per unit of risk. ARDAGH METAL PACDL 0001 is currently generating about -0.29 per unit of risk. If you would invest  11,494  in Camden Property Trust on October 4, 2024 and sell it today you would lose (594.00) from holding Camden Property Trust or give up 5.17% of portfolio value over 90 days.

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

Camden Property Trust  vs.  ARDAGH METAL PACDL 0001

Camden Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camden Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Continental and ARDAGH METAL

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

The idea behind Camden Property Trust and ARDAGH METAL PACDL 0001 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.