Correlation Between Spectrum Brands and Cabo Drilling

Can any of the company-specific risk be diversified away by investing in both Spectrum Brands and Cabo Drilling 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 Spectrum Brands and Cabo Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spectrum Brands Holdings and Cabo Drilling Corp, you can compare the effects of market volatilities on Spectrum Brands and Cabo Drilling 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 Spectrum Brands with a short position of Cabo Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Cabo Drilling.

Diversification Opportunities for Spectrum Brands and Cabo Drilling

0.0

Correlation Coefficient

Spectrum Brands  Cabo Drilling

Pay attention - limited upside

The 3 months correlation between Spectrum and Cabo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Cabo Drilling Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabo Drilling Corp and Spectrum Brands 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 Spectrum Brands Holdings are associated (or correlated) with Cabo Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabo Drilling Corp has no effect on the direction of Spectrum Brands i.e., Spectrum Brands and Cabo Drilling go up and down completely randomly.

Pair Corralation between Spectrum Brands and Cabo Drilling

If you would invest  0.01  in Cabo Drilling Corp on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Cabo Drilling Corp or generate 0.0% return on investment over 90 days.

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

Spectrum Brands Holdings  vs.  Cabo Drilling Corp

Spectrum Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cabo Drilling Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabo Drilling Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Cabo Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Spectrum Brands and Cabo Drilling

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

The idea behind Spectrum Brands Holdings and Cabo Drilling Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.