Correlation Between Applied Finance and One Choice
Can any of the company-specific risk be diversified away by investing in both Applied Finance and One Choice 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 Applied Finance and One Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and One Choice 2035, you can compare the effects of market volatilities on Applied Finance and One Choice 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 Applied Finance with a short position of One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and One Choice.
Diversification Opportunities for Applied Finance and One Choice
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and One is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and One Choice 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2035 and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2035 has no effect on the direction of Applied Finance i.e., Applied Finance and One Choice go up and down completely randomly.
Pair Corralation between Applied Finance and One Choice
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 3.04 times more return on investment than One Choice. However, Applied Finance is 3.04 times more volatile than One Choice 2035. It trades about 0.05 of its potential returns per unit of risk. One Choice 2035 is currently generating about 0.08 per unit of risk. If you would invest 1,657 in Applied Finance Explorer on September 12, 2024 and sell it today you would earn a total of 699.00 from holding Applied Finance Explorer or generate 42.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. One Choice 2035
Performance |
| Timeline |
| Applied Finance Explorer |
| One Choice 2035 |
Applied Finance and One Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and One Choice
The main advantage of trading using opposite Applied Finance and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| One Choice vs. Ab Discovery Value | One Choice vs. Amg River Road | One Choice vs. Mutual Of America | One Choice vs. Applied Finance Explorer |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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