Correlation Between Associated Capital and Value Line
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Value Line 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 Associated Capital and Value Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Value Line, you can compare the effects of market volatilities on Associated Capital and Value Line 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 Associated Capital with a short position of Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Value Line.
Diversification Opportunities for Associated Capital and Value Line
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Associated and Value is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Value Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line and Associated Capital 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 Associated Capital Group are associated (or correlated) with Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line has no effect on the direction of Associated Capital i.e., Associated Capital and Value Line go up and down completely randomly.
Pair Corralation between Associated Capital and Value Line
Allowing for the 90-day total investment horizon Associated Capital is expected to generate 1.43 times less return on investment than Value Line. But when comparing it to its historical volatility, Associated Capital Group is 2.26 times less risky than Value Line. It trades about 0.03 of its potential returns per unit of risk. Value Line is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,106 in Value Line on August 30, 2024 and sell it today you would earn a total of 27.00 from holding Value Line or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Value Line
Performance |
| Timeline |
| Associated Capital |
| Value Line |
Associated Capital and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Value Line
The main advantage of trading using opposite Associated Capital and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
| Value Line vs. Dun Bradstreet Holdings | Value Line vs. FactSet Research Systems | Value Line vs. Moodys | Value Line vs. MSCI Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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