Correlation Between Power Wind and Alexander Marine
Can any of the company-specific risk be diversified away by investing in both Power Wind and Alexander Marine 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 Power Wind and Alexander Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Wind Health and Alexander Marine Co, you can compare the effects of market volatilities on Power Wind and Alexander Marine 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 Power Wind with a short position of Alexander Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and Alexander Marine.
Diversification Opportunities for Power Wind and Alexander Marine
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Power and Alexander is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine and Power Wind 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 Power Wind Health are associated (or correlated) with Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Power Wind i.e., Power Wind and Alexander Marine go up and down completely randomly.
Pair Corralation between Power Wind and Alexander Marine
Assuming the 90 days trading horizon Power Wind Health is expected to generate 0.49 times more return on investment than Alexander Marine. However, Power Wind Health is 2.04 times less risky than Alexander Marine. It trades about -0.09 of its potential returns per unit of risk. Alexander Marine Co is currently generating about -0.36 per unit of risk. If you would invest 11,650 in Power Wind Health on August 26, 2024 and sell it today you would lose (200.00) from holding Power Wind Health or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Wind Health vs. Alexander Marine Co
Performance |
| Timeline |
| Power Wind Health |
| Alexander Marine |
Power Wind and Alexander Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Wind and Alexander Marine
The main advantage of trading using opposite Power Wind and Alexander Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Wind position performs unexpectedly, Alexander Marine 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 Alexander Marine will offset losses from the drop in Alexander Marine's long position.| Power Wind vs. Giant Manufacturing Co | Power Wind vs. Johnson Health Tech | Power Wind vs. Sports Gear Co |
| Alexander Marine vs. Giant Manufacturing Co | Alexander Marine vs. Johnson Health Tech | Alexander Marine vs. Sports Gear Co | Alexander Marine vs. Power Wind Health |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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