Correlation Between 90331HPL1 and Graham

Can any of the company-specific risk be diversified away by investing in both 90331HPL1 and Graham 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 90331HPL1 and Graham into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US BANK NATIONAL and Graham Holdings 575, you can compare the effects of market volatilities on 90331HPL1 and Graham 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 90331HPL1 with a short position of Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of 90331HPL1 and Graham.

Diversification Opportunities for 90331HPL1 and Graham

0.4

Correlation Coefficient

90331HPL1  Graham

Very weak diversification

The 3 months correlation between 90331HPL1 and Graham is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding US BANK NATIONAL and Graham Holdings 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 575 and 90331HPL1 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 US BANK NATIONAL are associated (or correlated) with Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings 575 has no effect on the direction of 90331HPL1 i.e., 90331HPL1 and Graham go up and down completely randomly.

Pair Corralation between 90331HPL1 and Graham

Assuming the 90 days trading horizon US BANK NATIONAL is expected to under-perform the Graham. In addition to that, 90331HPL1 is 4.21 times more volatile than Graham Holdings 575. It trades about -0.48 of its total potential returns per unit of risk. Graham Holdings 575 is currently generating about -0.03 per unit of volatility. If you would invest  9,950  in Graham Holdings 575 on October 22, 2024 and sell it today you would lose (8.00) from holding Graham Holdings 575 or give up 0.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.0%
Values	Daily Returns

US BANK NATIONAL  vs.  Graham Holdings 575

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Graham Holdings 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graham Holdings 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Graham is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 90331HPL1 and Graham

The main advantage of trading using opposite 90331HPL1 and Graham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 90331HPL1 position performs unexpectedly, Graham 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 Graham will offset losses from the drop in Graham's long position.

The idea behind US BANK NATIONAL and Graham Holdings 575 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.