Correlation Between Marketing Worldwide and Douglas Dynamics

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

By analyzing existing cross correlation between Marketing Worldwide and Douglas Dynamics, you can compare the effects of market volatilities on Marketing Worldwide and Douglas Dynamics 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 Marketing Worldwide with a short position of Douglas Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marketing Worldwide and Douglas Dynamics.

Diversification Opportunities for Marketing Worldwide and Douglas Dynamics

0.28

Correlation Coefficient

Marketing Worldwide  Douglas Dynamics

Modest diversification

The 3 months correlation between Marketing and Douglas is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Marketing Worldwide and Douglas Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Dynamics and Marketing Worldwide 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 Marketing Worldwide are associated (or correlated) with Douglas Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Dynamics has no effect on the direction of Marketing Worldwide i.e., Marketing Worldwide and Douglas Dynamics go up and down completely randomly.

Pair Corralation between Marketing Worldwide and Douglas Dynamics

Given the investment horizon of 90 days Marketing Worldwide is expected to generate 19.72 times more return on investment than Douglas Dynamics. However, Marketing Worldwide is 19.72 times more volatile than Douglas Dynamics. It trades about 0.13 of its potential returns per unit of risk. Douglas Dynamics is currently generating about -0.03 per unit of risk. If you would invest  0.02  in Marketing Worldwide on September 13, 2024 and sell it today you would lose (0.01) from holding Marketing Worldwide or give up 50.0% of portfolio value over 90 days.

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

Marketing Worldwide  vs.  Douglas Dynamics

Marketing Worldwide

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marketing Worldwide are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Marketing Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Douglas Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Douglas Dynamics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Marketing Worldwide and Douglas Dynamics

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

The idea behind Marketing Worldwide and Douglas Dynamics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.