Correlation Between United States and Craven House
Can any of the company-specific risk be diversified away by investing in both United States and Craven House 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 United States and Craven House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Craven House Capital, you can compare the effects of market volatilities on United States and Craven House 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 United States with a short position of Craven House. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Craven House.
Diversification Opportunities for United States and Craven House
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Craven is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Craven House Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Craven House Capital and United States 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 United States Steel are associated (or correlated) with Craven House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Craven House Capital has no effect on the direction of United States i.e., United States and Craven House go up and down completely randomly.
Pair Corralation between United States and Craven House
Assuming the 90 days trading horizon United States is expected to generate 3.53 times less return on investment than Craven House. But when comparing it to its historical volatility, United States Steel is 2.49 times less risky than Craven House. It trades about 0.04 of its potential returns per unit of risk. Craven House Capital is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8.50 in Craven House Capital on September 3, 2024 and sell it today you would earn a total of 16.50 from holding Craven House Capital or generate 194.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.37% |
| Values | Daily Returns |
United States Steel vs. Craven House Capital
Performance |
| Timeline |
| United States Steel |
| Craven House Capital |
United States and Craven House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Craven House
The main advantage of trading using opposite United States and Craven House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Craven House 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 Craven House will offset losses from the drop in Craven House's long position.| United States vs. Catalyst Media Group | United States vs. CATLIN GROUP | United States vs. RTW Venture Fund | United States vs. Secure Property Development |
| Craven House vs. Allianz Technology Trust | Craven House vs. Verizon Communications | Craven House vs. Charter Communications Cl | Craven House vs. Ashtead Technology Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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