Correlation Between 14040HCF0 and Dave Busters

Can any of the company-specific risk be diversified away by investing in both 14040HCF0 and Dave Busters 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 14040HCF0 and Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COF 395 and Dave Busters Entertainment, you can compare the effects of market volatilities on 14040HCF0 and Dave Busters 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 14040HCF0 with a short position of Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of 14040HCF0 and Dave Busters.

Diversification Opportunities for 14040HCF0 and Dave Busters

0.42

Correlation Coefficient

14040HCF0  Dave Busters

Very weak diversification

The 3 months correlation between 14040HCF0 and Dave is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding COF 395 and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta and 14040HCF0 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 COF 395 are associated (or correlated) with Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of 14040HCF0 i.e., 14040HCF0 and Dave Busters go up and down completely randomly.

Pair Corralation between 14040HCF0 and Dave Busters

Assuming the 90 days trading horizon COF 395 is expected to generate 0.78 times more return on investment than Dave Busters. However, COF 395 is 1.28 times less risky than Dave Busters. It trades about -0.07 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.13 per unit of risk. If you would invest  9,642  in COF 395 on October 11, 2024 and sell it today you would lose (892.00) from holding COF 395 or give up 9.25% of portfolio value over 90 days.

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

COF 395  vs.  Dave Busters Entertainment

14040HCF0

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COF 395 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 14040HCF0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 14040HCF0 and Dave Busters

The main advantage of trading using opposite 14040HCF0 and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 14040HCF0 position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.

The idea behind COF 395 and Dave Busters Entertainment 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.