Correlation Between Pure Storage and Canon
Can any of the company-specific risk be diversified away by investing in both Pure Storage and Canon 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 Pure Storage and Canon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Canon Inc, you can compare the effects of market volatilities on Pure Storage and Canon 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 Pure Storage with a short position of Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Canon.
Diversification Opportunities for Pure Storage and Canon
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pure and Canon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc and Pure Storage 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 Pure Storage are associated (or correlated) with Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of Pure Storage i.e., Pure Storage and Canon go up and down completely randomly.
Pair Corralation between Pure Storage and Canon
Assuming the 90 days horizon Pure Storage is expected to generate 3.69 times more return on investment than Canon. However, Pure Storage is 3.69 times more volatile than Canon Inc. It trades about 0.18 of its potential returns per unit of risk. Canon Inc is currently generating about 0.08 per unit of risk. If you would invest 4,864 in Pure Storage on September 13, 2024 and sell it today you would earn a total of 1,031 from holding Pure Storage or generate 21.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Storage vs. Canon Inc
Performance |
| Timeline |
| Pure Storage |
| Canon Inc |
Pure Storage and Canon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and Canon
The main advantage of trading using opposite Pure Storage and Canon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, Canon 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 Canon will offset losses from the drop in Canon's long position.| Pure Storage vs. NetApp Inc | Pure Storage vs. Teradata Corp | Pure Storage vs. Superior Plus Corp | Pure Storage vs. Origin Agritech |
| Canon vs. HF FOODS GRP | Canon vs. AUSTEVOLL SEAFOOD | Canon vs. VIRGIN WINES UK | Canon vs. PT Indofood Sukses |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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