Correlation Between SWISS WATER and Big 5
Can any of the company-specific risk be diversified away by investing in both SWISS WATER and Big 5 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 SWISS WATER and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Big 5 Sporting, you can compare the effects of market volatilities on SWISS WATER and Big 5 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 SWISS WATER with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Big 5.
Diversification Opportunities for SWISS WATER and Big 5
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SWISS and Big is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and SWISS WATER 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 SWISS WATER DECAFFCOFFEE are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of SWISS WATER i.e., SWISS WATER and Big 5 go up and down completely randomly.
Pair Corralation between SWISS WATER and Big 5
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 0.52 times more return on investment than Big 5. However, SWISS WATER DECAFFCOFFEE is 1.94 times less risky than Big 5. It trades about 0.08 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.08 per unit of risk. If you would invest 262.00 in SWISS WATER DECAFFCOFFEE on August 28, 2024 and sell it today you would earn a total of 10.00 from holding SWISS WATER DECAFFCOFFEE or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. Big 5 Sporting
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| Big 5 Sporting |
SWISS WATER and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and Big 5
The main advantage of trading using opposite SWISS WATER and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| SWISS WATER vs. RYU Apparel | SWISS WATER vs. New Residential Investment | SWISS WATER vs. American Eagle Outfitters | SWISS WATER vs. PennyMac Mortgage Investment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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