Correlation Between Superior Plus and Textron
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Textron 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 Superior Plus and Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Textron, you can compare the effects of market volatilities on Superior Plus and Textron 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 Superior Plus with a short position of Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Textron.
Diversification Opportunities for Superior Plus and Textron
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Superior and Textron is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Superior Plus i.e., Superior Plus and Textron go up and down completely randomly.
Pair Corralation between Superior Plus and Textron
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Textron. In addition to that, Superior Plus is 2.13 times more volatile than Textron. It trades about -0.02 of its total potential returns per unit of risk. Textron is currently generating about 0.0 per unit of volatility. If you would invest 7,832 in Textron on September 12, 2024 and sell it today you would lose (46.00) from holding Textron or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Textron
Performance |
| Timeline |
| Superior Plus Corp |
| Textron |
Superior Plus and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Textron
The main advantage of trading using opposite Superior Plus and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Superior Plus vs. HF SINCLAIR P | Superior Plus vs. PT Indofood Sukses | Superior Plus vs. SENECA FOODS A | Superior Plus vs. ScanSource |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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