Correlation Between Custom Truck and Safe Pro

Can any of the company-specific risk be diversified away by investing in both Custom Truck and Safe Pro 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 Safe Pro 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 Safe Pro Group, you can compare the effects of market volatilities on Custom Truck and Safe Pro 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 Safe Pro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and Safe Pro.

Diversification Opportunities for Custom Truck and Safe Pro

0.66

Correlation Coefficient

Custom Truck  Safe Pro

Poor diversification

The 3 months correlation between Custom and Safe is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and Safe Pro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Pro Group 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 Safe Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Pro Group has no effect on the direction of Custom Truck i.e., Custom Truck and Safe Pro go up and down completely randomly.

Pair Corralation between Custom Truck and Safe Pro

Given the investment horizon of 90 days Custom Truck is expected to generate 1.98 times less return on investment than Safe Pro. But when comparing it to its historical volatility, Custom Truck One is 3.29 times less risky than Safe Pro. It trades about 0.23 of its potential returns per unit of risk. Safe Pro Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  246.00  in Safe Pro Group on October 9, 2024 and sell it today you would earn a total of  207.00  from holding Safe Pro Group or generate 84.15% return on investment over 90 days.

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

Custom Truck One  vs.  Safe Pro Group

Custom Truck One

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 17 (%) 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.

Safe Pro Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Pro Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Safe Pro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Custom Truck and Safe Pro

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

The idea behind Custom Truck One and Safe Pro Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.