Correlation Between Otis Worldwide and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Otis Worldwide and Atlas Copco 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 Otis Worldwide and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otis Worldwide Corp and Atlas Copco A, you can compare the effects of market volatilities on Otis Worldwide and Atlas Copco 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 Otis Worldwide with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otis Worldwide and Atlas Copco.
Diversification Opportunities for Otis Worldwide and Atlas Copco
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Otis and Atlas is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Otis Worldwide Corp and Atlas Copco A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco A and Otis Worldwide 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 Otis Worldwide Corp are associated (or correlated) with Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco A has no effect on the direction of Otis Worldwide i.e., Otis Worldwide and Atlas Copco go up and down completely randomly.
Pair Corralation between Otis Worldwide and Atlas Copco
Assuming the 90 days horizon Otis Worldwide is expected to generate 9.07 times less return on investment than Atlas Copco. But when comparing it to its historical volatility, Otis Worldwide Corp is 1.86 times less risky than Atlas Copco. It trades about 0.01 of its potential returns per unit of risk. Atlas Copco A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,520 in Atlas Copco A on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Atlas Copco A or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otis Worldwide Corp vs. Atlas Copco A
Performance |
| Timeline |
| Otis Worldwide Corp |
| Atlas Copco A |
Otis Worldwide and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otis Worldwide and Atlas Copco
The main advantage of trading using opposite Otis Worldwide and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otis Worldwide position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Otis Worldwide vs. Astral Foods Limited | Otis Worldwide vs. United Natural Foods | Otis Worldwide vs. HK Electric Investments | Otis Worldwide vs. MOLSON RS BEVERAGE |
| Atlas Copco vs. Ping An Insurance | Atlas Copco vs. REVO INSURANCE SPA | Atlas Copco vs. Lion One Metals | Atlas Copco vs. ZURICH INSURANCE GROUP |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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