Correlation Between Terex and SPORTING

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

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

Diversification Opportunities for Terex and SPORTING

0.07

Correlation Coefficient

Terex  SPORTING

Significant diversification

The 3 months correlation between Terex and SPORTING is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Terex and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING and Terex 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 Terex are associated (or correlated) with SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Terex i.e., Terex and SPORTING go up and down completely randomly.

Pair Corralation between Terex and SPORTING

Assuming the 90 days horizon Terex is expected to under-perform the SPORTING. But the stock apears to be less risky and, when comparing its historical volatility, Terex is 1.72 times less risky than SPORTING. The stock trades about -0.23 of its potential returns per unit of risk. The SPORTING is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  106.00  in SPORTING on December 4, 2024 and sell it today you would lose (12.00) from holding SPORTING or give up 11.32% of portfolio value over 90 days.

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

Terex  vs.  SPORTING

Terex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SPORTING

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Terex and SPORTING

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

The idea behind Terex and SPORTING 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.