Correlation Between SILVER BULLET and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both SILVER BULLET and PREMIER FOODS 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 SILVER BULLET and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SILVER BULLET DATA and PREMIER FOODS, you can compare the effects of market volatilities on SILVER BULLET and PREMIER FOODS 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 SILVER BULLET with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SILVER BULLET and PREMIER FOODS.
Diversification Opportunities for SILVER BULLET and PREMIER FOODS
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SILVER and PREMIER is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SILVER BULLET DATA and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and SILVER BULLET 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 SILVER BULLET DATA are associated (or correlated) with PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of SILVER BULLET i.e., SILVER BULLET and PREMIER FOODS go up and down completely randomly.
Pair Corralation between SILVER BULLET and PREMIER FOODS
Assuming the 90 days horizon SILVER BULLET DATA is expected to generate 1.8 times more return on investment than PREMIER FOODS. However, SILVER BULLET is 1.8 times more volatile than PREMIER FOODS. It trades about 0.07 of its potential returns per unit of risk. PREMIER FOODS is currently generating about -0.04 per unit of risk. If you would invest 60.00 in SILVER BULLET DATA on October 25, 2024 and sell it today you would earn a total of 6.00 from holding SILVER BULLET DATA or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SILVER BULLET DATA vs. PREMIER FOODS
Performance |
| Timeline |
| SILVER BULLET DATA |
| PREMIER FOODS |
SILVER BULLET and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SILVER BULLET and PREMIER FOODS
The main advantage of trading using opposite SILVER BULLET and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SILVER BULLET position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.| SILVER BULLET vs. ZINC MEDIA GR | SILVER BULLET vs. Universal Entertainment | SILVER BULLET vs. Dave Busters Entertainment | SILVER BULLET vs. CNVISION MEDIA |
| PREMIER FOODS vs. CanSino Biologics | PREMIER FOODS vs. NURAN WIRELESS INC | PREMIER FOODS vs. AGF Management Limited | PREMIER FOODS vs. KENEDIX OFFICE INV |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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