Correlation Between Pets At and National Atomic

Can any of the company-specific risk be diversified away by investing in both Pets At and National Atomic 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 Pets At and National Atomic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pets at Home and National Atomic Co, you can compare the effects of market volatilities on Pets At and National Atomic 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 Pets At with a short position of National Atomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and National Atomic.

Diversification Opportunities for Pets At and National Atomic

-0.3

Correlation Coefficient

Pets At  National Atomic

Very good diversification

The 3 months correlation between Pets and National is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and National Atomic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Atomic and Pets At 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 Pets at Home are associated (or correlated) with National Atomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Atomic has no effect on the direction of Pets At i.e., Pets At and National Atomic go up and down completely randomly.

Pair Corralation between Pets At and National Atomic

Assuming the 90 days trading horizon Pets at Home is expected to generate 0.95 times more return on investment than National Atomic. However, Pets at Home is 1.05 times less risky than National Atomic. It trades about 0.13 of its potential returns per unit of risk. National Atomic Co is currently generating about -0.07 per unit of risk. If you would invest  20,460  in Pets at Home on December 28, 2024 and sell it today you would earn a total of  3,040  from holding Pets at Home or generate 14.86% return on investment over 90 days.

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

Pets at Home  vs.  National Atomic Co

Pets at Home

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Pets At unveiled solid returns over the last few months and may actually be approaching a breakup point.

National Atomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Atomic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pets At and National Atomic

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

The idea behind Pets at Home and National Atomic Co 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 Stocks Directory module to find actively traded stocks across global markets.