Correlation Between Affiliated Resources and Dassault Systemes
Can any of the company-specific risk be diversified away by investing in both Affiliated Resources and Dassault Systemes 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 Affiliated Resources and Dassault Systemes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Resources Corp and Dassault Systemes SE, you can compare the effects of market volatilities on Affiliated Resources and Dassault Systemes 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 Affiliated Resources with a short position of Dassault Systemes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Resources and Dassault Systemes.
Diversification Opportunities for Affiliated Resources and Dassault Systemes
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affiliated and Dassault is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Resources Corp and Dassault Systemes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systemes and Affiliated Resources 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 Affiliated Resources Corp are associated (or correlated) with Dassault Systemes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systemes has no effect on the direction of Affiliated Resources i.e., Affiliated Resources and Dassault Systemes go up and down completely randomly.
Pair Corralation between Affiliated Resources and Dassault Systemes
Given the investment horizon of 90 days Affiliated Resources Corp is expected to generate 3.74 times more return on investment than Dassault Systemes. However, Affiliated Resources is 3.74 times more volatile than Dassault Systemes SE. It trades about 0.13 of its potential returns per unit of risk. Dassault Systemes SE is currently generating about -0.02 per unit of risk. If you would invest 2.95 in Affiliated Resources Corp on August 29, 2024 and sell it today you would earn a total of 5.25 from holding Affiliated Resources Corp or generate 177.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Resources Corp vs. Dassault Systemes SE
Performance |
| Timeline |
| Affiliated Resources Corp |
| Dassault Systemes |
Affiliated Resources and Dassault Systemes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Resources and Dassault Systemes
The main advantage of trading using opposite Affiliated Resources and Dassault Systemes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Resources position performs unexpectedly, Dassault Systemes 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 Dassault Systemes will offset losses from the drop in Dassault Systemes' long position.| Affiliated Resources vs. Allison Transmission Holdings | Affiliated Resources vs. Luminar Technologies | Affiliated Resources vs. Lear Corporation | Affiliated Resources vs. BorgWarner |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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