Correlation Between Custom Truck and 1606 Corp

Can any of the company-specific risk be diversified away by investing in both Custom Truck and 1606 Corp 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 Custom Truck and 1606 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Custom Truck One and 1606 Corp, you can compare the effects of market volatilities on Custom Truck and 1606 Corp 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 Custom Truck with a short position of 1606 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and 1606 Corp.

Diversification Opportunities for Custom Truck and 1606 Corp

-0.67

Correlation Coefficient

Custom Truck  1606 Corp

Excellent diversification

The 3 months correlation between Custom and 1606 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and 1606 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1606 Corp and Custom Truck 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 Custom Truck One are associated (or correlated) with 1606 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1606 Corp has no effect on the direction of Custom Truck i.e., Custom Truck and 1606 Corp go up and down completely randomly.

Pair Corralation between Custom Truck and 1606 Corp

Given the investment horizon of 90 days Custom Truck One is expected to generate 0.2 times more return on investment than 1606 Corp. However, Custom Truck One is 4.89 times less risky than 1606 Corp. It trades about -0.32 of its potential returns per unit of risk. 1606 Corp is currently generating about -0.2 per unit of risk. If you would invest  530.00  in Custom Truck One on October 11, 2024 and sell it today you would lose (80.00) from holding Custom Truck One or give up 15.09% of portfolio value over 90 days.

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

Custom Truck One  vs.  1606 Corp

Custom Truck One

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

1606 Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1606 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Custom Truck and 1606 Corp

The main advantage of trading using opposite Custom Truck and 1606 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck position performs unexpectedly, 1606 Corp 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 1606 Corp will offset losses from the drop in 1606 Corp's long position.

The idea behind Custom Truck One and 1606 Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.