Correlation Between Train Alliance and Goodbye Kansas

Can any of the company-specific risk be diversified away by investing in both Train Alliance and Goodbye Kansas 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 Train Alliance and Goodbye Kansas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Train Alliance Sweden and Goodbye Kansas Group, you can compare the effects of market volatilities on Train Alliance and Goodbye Kansas 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 Train Alliance with a short position of Goodbye Kansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Train Alliance and Goodbye Kansas.

Diversification Opportunities for Train Alliance and Goodbye Kansas

0.14

Correlation Coefficient

Train Alliance  Goodbye Kansas

Average diversification

The 3 months correlation between Train and Goodbye is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Train Alliance Sweden and Goodbye Kansas Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodbye Kansas Group and Train Alliance 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 Train Alliance Sweden are associated (or correlated) with Goodbye Kansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodbye Kansas Group has no effect on the direction of Train Alliance i.e., Train Alliance and Goodbye Kansas go up and down completely randomly.

Pair Corralation between Train Alliance and Goodbye Kansas

Assuming the 90 days trading horizon Train Alliance Sweden is expected to under-perform the Goodbye Kansas. But the stock apears to be less risky and, when comparing its historical volatility, Train Alliance Sweden is 2.2 times less risky than Goodbye Kansas. The stock trades about -0.03 of its potential returns per unit of risk. The Goodbye Kansas Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Goodbye Kansas Group on September 29, 2024 and sell it today you would earn a total of  16.00  from holding Goodbye Kansas Group or generate 12.21% return on investment over 90 days.

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

Train Alliance Sweden  vs.  Goodbye Kansas Group

Train Alliance Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Train Alliance Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Goodbye Kansas Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goodbye Kansas Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Goodbye Kansas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Train Alliance and Goodbye Kansas

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

The idea behind Train Alliance Sweden and Goodbye Kansas Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .