Correlation Between ARDAGH METAL and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and Sterling Construction 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 ARDAGH METAL and Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and Sterling Construction, you can compare the effects of market volatilities on ARDAGH METAL and Sterling Construction 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 ARDAGH METAL with a short position of Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and Sterling Construction.
Diversification Opportunities for ARDAGH METAL and Sterling Construction
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARDAGH and Sterling is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and Sterling Construction go up and down completely randomly.
Pair Corralation between ARDAGH METAL and Sterling Construction
Assuming the 90 days horizon ARDAGH METAL is expected to generate 3.8 times less return on investment than Sterling Construction. In addition to that, ARDAGH METAL is 1.05 times more volatile than Sterling Construction. It trades about 0.03 of its total potential returns per unit of risk. Sterling Construction is currently generating about 0.12 per unit of volatility. If you would invest 4,920 in Sterling Construction on August 31, 2024 and sell it today you would earn a total of 13,390 from holding Sterling Construction or generate 272.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
ARDAGH METAL PACDL 0001 vs. Sterling Construction
Performance |
| Timeline |
| ARDAGH METAL PACDL |
| Sterling Construction |
ARDAGH METAL and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARDAGH METAL and Sterling Construction
The main advantage of trading using opposite ARDAGH METAL and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARDAGH METAL position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| ARDAGH METAL vs. KAUFMAN ET BROAD | ARDAGH METAL vs. GRIFFIN MINING LTD | ARDAGH METAL vs. Nishi Nippon Railroad Co | ARDAGH METAL vs. EVS Broadcast Equipment |
| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings | Sterling Construction vs. Origin Agritech |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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