Correlation Between PLAYMATES TOYS and Aqua America
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS and Aqua America 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 PLAYMATES TOYS and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and Aqua America, you can compare the effects of market volatilities on PLAYMATES TOYS and Aqua America 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 PLAYMATES TOYS with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and Aqua America.
Diversification Opportunities for PLAYMATES TOYS and Aqua America
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between PLAYMATES and Aqua is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and Aqua America go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and Aqua America
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the Aqua America. In addition to that, PLAYMATES TOYS is 2.61 times more volatile than Aqua America. It trades about -0.16 of its total potential returns per unit of risk. Aqua America is currently generating about 0.12 per unit of volatility. If you would invest 3,611 in Aqua America on September 15, 2024 and sell it today you would earn a total of 88.00 from holding Aqua America or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. Aqua America
Performance |
| Timeline |
| PLAYMATES TOYS |
| Aqua America |
PLAYMATES TOYS and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and Aqua America
The main advantage of trading using opposite PLAYMATES TOYS and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc |
| Aqua America vs. bet at home AG | Aqua America vs. PLAYMATES TOYS | Aqua America vs. CHINA TONTINE WINES | Aqua America vs. KB HOME |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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