Correlation Between Cairo Communication and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Cairo Communication and WW Grainger 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 Cairo Communication and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairo Communication SpA and WW Grainger, you can compare the effects of market volatilities on Cairo Communication and WW Grainger 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 Cairo Communication with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairo Communication and WW Grainger.
Diversification Opportunities for Cairo Communication and WW Grainger
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cairo and 0IZI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cairo Communication SpA and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and Cairo Communication 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 Cairo Communication SpA are associated (or correlated) with WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Cairo Communication i.e., Cairo Communication and WW Grainger go up and down completely randomly.
Pair Corralation between Cairo Communication and WW Grainger
Assuming the 90 days trading horizon Cairo Communication is expected to generate 2.96 times less return on investment than WW Grainger. But when comparing it to its historical volatility, Cairo Communication SpA is 5.67 times less risky than WW Grainger. It trades about 0.09 of its potential returns per unit of risk. WW Grainger is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 55,535 in WW Grainger on September 14, 2024 and sell it today you would earn a total of 59,253 from holding WW Grainger or generate 106.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.78% |
| Values | Daily Returns |
Cairo Communication SpA vs. WW Grainger
Performance |
| Timeline |
| Cairo Communication SpA |
| WW Grainger |
Cairo Communication and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairo Communication and WW Grainger
The main advantage of trading using opposite Cairo Communication and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairo Communication position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| Cairo Communication vs. Herald Investment Trust | Cairo Communication vs. The Mercantile Investment | Cairo Communication vs. Beeks Trading | Cairo Communication vs. Oakley Capital Investments |
| WW Grainger vs. Mindflair Plc | WW Grainger vs. Cairo Communication SpA | WW Grainger vs. Impax Asset Management | WW Grainger vs. Charter Communications Cl |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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