Correlation Between Strickland Metals and Autosports
Can any of the company-specific risk be diversified away by investing in both Strickland Metals and Autosports 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 Strickland Metals and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strickland Metals and Autosports Group, you can compare the effects of market volatilities on Strickland Metals and Autosports 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 Strickland Metals with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and Autosports.
Diversification Opportunities for Strickland Metals and Autosports
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Strickland and Autosports is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Strickland Metals 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 Strickland Metals are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Strickland Metals i.e., Strickland Metals and Autosports go up and down completely randomly.
Pair Corralation between Strickland Metals and Autosports
Assuming the 90 days trading horizon Strickland Metals is expected to generate 3.24 times more return on investment than Autosports. However, Strickland Metals is 3.24 times more volatile than Autosports Group. It trades about 0.06 of its potential returns per unit of risk. Autosports Group is currently generating about -0.29 per unit of risk. If you would invest 7.70 in Strickland Metals on September 26, 2024 and sell it today you would earn a total of 0.30 from holding Strickland Metals or generate 3.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Strickland Metals vs. Autosports Group
Performance |
Timeline |
Strickland Metals |
Autosports Group |
Strickland Metals and Autosports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Strickland Metals and Autosports
The main advantage of trading using opposite Strickland Metals and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland Metals position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.Strickland Metals vs. Kip McGrath Education | Strickland Metals vs. MetalsGrove Mining | Strickland Metals vs. Autosports Group | Strickland Metals vs. Viva Leisure |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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