Correlation Between Caldwell Orkin and Marshfield Centrated

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

By analyzing existing cross correlation between Caldwell Orkin Market and Marshfield Centrated Opportunity, you can compare the effects of market volatilities on Caldwell Orkin and Marshfield Centrated 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 Caldwell Orkin with a short position of Marshfield Centrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caldwell Orkin and Marshfield Centrated.

Diversification Opportunities for Caldwell Orkin and Marshfield Centrated

0.6

Correlation Coefficient

Caldwell Orkin  Marshfield Centrated

Poor diversification

The 3 months correlation between Caldwell and Marshfield is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Orkin Market and Marshfield Centrated Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marshfield Centrated and Caldwell Orkin 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 Caldwell Orkin Market are associated (or correlated) with Marshfield Centrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marshfield Centrated has no effect on the direction of Caldwell Orkin i.e., Caldwell Orkin and Marshfield Centrated go up and down completely randomly.

Pair Corralation between Caldwell Orkin and Marshfield Centrated

Assuming the 90 days horizon Caldwell Orkin Market is expected to generate 0.95 times more return on investment than Marshfield Centrated. However, Caldwell Orkin Market is 1.06 times less risky than Marshfield Centrated. It trades about -0.18 of its potential returns per unit of risk. Marshfield Centrated Opportunity is currently generating about -0.3 per unit of risk. If you would invest  5,322  in Caldwell Orkin Market on September 28, 2024 and sell it today you would lose (204.00) from holding Caldwell Orkin Market or give up 3.83% of portfolio value over 90 days.

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

Caldwell Orkin Market  vs.  Marshfield Centrated Opportuni

Caldwell Orkin Market

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Orkin Market are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Caldwell Orkin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marshfield Centrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marshfield Centrated Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Marshfield Centrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caldwell Orkin and Marshfield Centrated

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

The idea behind Caldwell Orkin Market and Marshfield Centrated Opportunity 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.