Correlation Between SWISS WATER and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SWISS WATER and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT, you can compare the effects of market volatilities on SWISS WATER and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and CDL INVESTMENT.
Diversification Opportunities for SWISS WATER and CDL INVESTMENT
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SWISS and CDL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of SWISS WATER i.e., SWISS WATER and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between SWISS WATER and CDL INVESTMENT
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the CDL INVESTMENT. In addition to that, SWISS WATER is 1.26 times more volatile than CDL INVESTMENT. It trades about -0.19 of its total potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.12 per unit of volatility. If you would invest 44.00 in CDL INVESTMENT on October 22, 2024 and sell it today you would lose (2.00) from holding CDL INVESTMENT or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. CDL INVESTMENT
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| CDL INVESTMENT |
SWISS WATER and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and CDL INVESTMENT
The main advantage of trading using opposite SWISS WATER and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| SWISS WATER vs. MOVIE GAMES SA | SWISS WATER vs. Zoom Video Communications | SWISS WATER vs. IMPERIAL TOBACCO | SWISS WATER vs. USWE SPORTS AB |
| CDL INVESTMENT vs. WillScot Mobile Mini | CDL INVESTMENT vs. Cal Maine Foods | CDL INVESTMENT vs. PLANT VEDA FOODS | CDL INVESTMENT vs. Ribbon Communications |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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