Correlation Between SHIP HEALTHCARE and Mohawk Industries

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Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE and Mohawk Industries 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 SHIP HEALTHCARE and Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Mohawk Industries, you can compare the effects of market volatilities on SHIP HEALTHCARE and Mohawk Industries 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 SHIP HEALTHCARE with a short position of Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Mohawk Industries.

Diversification Opportunities for SHIP HEALTHCARE and Mohawk Industries

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SHIP and Mohawk is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC are associated (or correlated) with Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Mohawk Industries go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and Mohawk Industries

Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 1.45 times less return on investment than Mohawk Industries. In addition to that, SHIP HEALTHCARE is 1.18 times more volatile than Mohawk Industries. It trades about 0.02 of its total potential returns per unit of risk. Mohawk Industries is currently generating about 0.04 per unit of volatility. If you would invest  9,100  in Mohawk Industries on September 13, 2024 and sell it today you would earn a total of  3,300  from holding Mohawk Industries or generate 36.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SHIP HEALTHCARE HLDGINC  vs.  Mohawk Industries

 Performance 
       Timeline  
SHIP HEALTHCARE HLDGINC 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SHIP HEALTHCARE HLDGINC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SHIP HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Mohawk Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mohawk Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mohawk Industries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SHIP HEALTHCARE and Mohawk Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SHIP HEALTHCARE and Mohawk Industries

The main advantage of trading using opposite SHIP HEALTHCARE and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.
The idea behind SHIP HEALTHCARE HLDGINC and Mohawk Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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