Correlation Between Sturm Ruger and National Presto

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

By analyzing existing cross correlation between Sturm Ruger and National Presto Industries, you can compare the effects of market volatilities on Sturm Ruger and National Presto 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 Sturm Ruger with a short position of National Presto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sturm Ruger and National Presto.

Diversification Opportunities for Sturm Ruger and National Presto

-0.49

Correlation Coefficient

Sturm Ruger  National Presto

Very good diversification

The 3 months correlation between Sturm and National is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and National Presto Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Presto Indu and Sturm Ruger 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 Sturm Ruger are associated (or correlated) with National Presto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Presto Indu has no effect on the direction of Sturm Ruger i.e., Sturm Ruger and National Presto go up and down completely randomly.

Pair Corralation between Sturm Ruger and National Presto

Considering the 90-day investment horizon Sturm Ruger is expected to under-perform the National Presto. But the stock apears to be less risky and, when comparing its historical volatility, Sturm Ruger is 1.31 times less risky than National Presto. The stock trades about -0.14 of its potential returns per unit of risk. The National Presto Industries is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7,178  in National Presto Industries on September 5, 2024 and sell it today you would earn a total of  1,361  from holding National Presto Industries or generate 18.96% return on investment over 90 days.

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

Sturm Ruger  vs.  National Presto Industries

Sturm Ruger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturm Ruger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

National Presto Indu

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Presto Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, National Presto disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sturm Ruger and National Presto

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

The idea behind Sturm Ruger and National Presto Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..