Correlation Between AAP and Strattner Financial
Can any of the company-specific risk be diversified away by investing in both AAP and Strattner Financial 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 AAP and Strattner Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAP Inc and Strattner Financial Group, you can compare the effects of market volatilities on AAP and Strattner Financial 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 AAP with a short position of Strattner Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAP and Strattner Financial.
Diversification Opportunities for AAP and Strattner Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AAP and Strattner is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AAP Inc and Strattner Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattner Financial and AAP 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 AAP Inc are associated (or correlated) with Strattner Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattner Financial has no effect on the direction of AAP i.e., AAP and Strattner Financial go up and down completely randomly.
Pair Corralation between AAP and Strattner Financial
Given the investment horizon of 90 days AAP Inc is expected to generate 0.54 times more return on investment than Strattner Financial. However, AAP Inc is 1.84 times less risky than Strattner Financial. It trades about 0.11 of its potential returns per unit of risk. Strattner Financial Group is currently generating about 0.05 per unit of risk. If you would invest 0.12 in AAP Inc on September 3, 2024 and sell it today you would lose (0.10) from holding AAP Inc or give up 83.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
AAP Inc vs. Strattner Financial Group
Performance |
| Timeline |
| AAP Inc |
| Strattner Financial |
AAP and Strattner Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAP and Strattner Financial
The main advantage of trading using opposite AAP and Strattner Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAP position performs unexpectedly, Strattner Financial 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 Strattner Financial will offset losses from the drop in Strattner Financial's long position.The idea behind AAP Inc and Strattner Financial Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Strattner Financial vs. Seadrill Limited | Strattner Financial vs. Noble plc | Strattner Financial vs. Borr Drilling | Strattner Financial vs. SCOR PK |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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