Correlation Between SPORTING and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both SPORTING and AIR PRODCHEMICALS 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 SPORTING and AIR PRODCHEMICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORTING and AIR PRODCHEMICALS, you can compare the effects of market volatilities on SPORTING and AIR PRODCHEMICALS 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 SPORTING with a short position of AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORTING and AIR PRODCHEMICALS.
Diversification Opportunities for SPORTING and AIR PRODCHEMICALS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPORTING and AIR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and SPORTING 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 SPORTING are associated (or correlated) with AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of SPORTING i.e., SPORTING and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between SPORTING and AIR PRODCHEMICALS
Assuming the 90 days trading horizon SPORTING is expected to generate 2.71 times less return on investment than AIR PRODCHEMICALS. But when comparing it to its historical volatility, SPORTING is 1.27 times less risky than AIR PRODCHEMICALS. It trades about 0.11 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 24,547 in AIR PRODCHEMICALS on September 10, 2024 and sell it today you would earn a total of 5,943 from holding AIR PRODCHEMICALS or generate 24.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SPORTING vs. AIR PRODCHEMICALS
Performance |
Timeline |
SPORTING |
AIR PRODCHEMICALS |
SPORTING and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPORTING and AIR PRODCHEMICALS
The main advantage of trading using opposite SPORTING and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORTING position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.SPORTING vs. UMC Electronics Co | SPORTING vs. KIMBALL ELECTRONICS | SPORTING vs. CARSALESCOM | SPORTING vs. ARROW ELECTRONICS |
AIR PRODCHEMICALS vs. Norwegian Air Shuttle | AIR PRODCHEMICALS vs. WIZZ AIR HLDGUNSPADR4 | AIR PRODCHEMICALS vs. MTI WIRELESS EDGE | AIR PRODCHEMICALS vs. SBA Communications Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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