Correlation Between Ball Corp and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Ball Corp and Gamma Communications 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 Ball Corp and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ball Corp and Gamma Communications PLC, you can compare the effects of market volatilities on Ball Corp and Gamma Communications 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 Ball Corp with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ball Corp and Gamma Communications.
Diversification Opportunities for Ball Corp and Gamma Communications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ball and Gamma is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC and Ball Corp 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 Ball Corp are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Ball Corp i.e., Ball Corp and Gamma Communications go up and down completely randomly.
Pair Corralation between Ball Corp and Gamma Communications
Assuming the 90 days trading horizon Ball Corp is expected to generate 0.82 times more return on investment than Gamma Communications. However, Ball Corp is 1.21 times less risky than Gamma Communications. It trades about -0.04 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.37 per unit of risk. If you would invest 5,556 in Ball Corp on October 23, 2024 and sell it today you would lose (64.00) from holding Ball Corp or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Ball Corp vs. Gamma Communications PLC
Performance |
| Timeline |
| Ball Corp |
| Gamma Communications PLC |
Ball Corp and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ball Corp and Gamma Communications
The main advantage of trading using opposite Ball Corp and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ball Corp position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Ball Corp vs. Symphony Environmental Technologies | Ball Corp vs. Allianz Technology Trust | Ball Corp vs. Polar Capital Technology | Ball Corp vs. Light Science Technologies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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