Correlation Between AMCON Distributing and 665859AT1

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and 665859AT1 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 AMCON Distributing and 665859AT1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and NORTHERN TR P, you can compare the effects of market volatilities on AMCON Distributing and 665859AT1 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 AMCON Distributing with a short position of 665859AT1. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and 665859AT1.

Diversification Opportunities for AMCON Distributing and 665859AT1

0.23

Correlation Coefficient

AMCON Distributing  665859AT1

Modest diversification

The 3 months correlation between AMCON and 665859AT1 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and NORTHERN TR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TR P and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with 665859AT1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN TR P has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and 665859AT1 go up and down completely randomly.

Pair Corralation between AMCON Distributing and 665859AT1

Considering the 90-day investment horizon AMCON Distributing is expected to generate 15.29 times more return on investment than 665859AT1. However, AMCON Distributing is 15.29 times more volatile than NORTHERN TR P. It trades about 0.06 of its potential returns per unit of risk. NORTHERN TR P is currently generating about -0.11 per unit of risk. If you would invest  12,494  in AMCON Distributing on September 30, 2024 and sell it today you would earn a total of  1,006  from holding AMCON Distributing or generate 8.05% return on investment over 90 days.

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

AMCON Distributing  vs.  NORTHERN TR P

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

NORTHERN TR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 665859AT1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and 665859AT1

The main advantage of trading using opposite AMCON Distributing and 665859AT1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, 665859AT1 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 665859AT1 will offset losses from the drop in 665859AT1's long position.

The idea behind AMCON Distributing and NORTHERN TR P 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..