Correlation Between Aston Martin and Herald Investment
Can any of the company-specific risk be diversified away by investing in both Aston Martin and Herald Investment 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 Aston Martin and Herald Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aston Martin Lagonda and Herald Investment Trust, you can compare the effects of market volatilities on Aston Martin and Herald Investment 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 Aston Martin with a short position of Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston Martin and Herald Investment.
Diversification Opportunities for Aston Martin and Herald Investment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aston and Herald is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust and Aston Martin 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 Aston Martin Lagonda are associated (or correlated) with Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of Aston Martin i.e., Aston Martin and Herald Investment go up and down completely randomly.
Pair Corralation between Aston Martin and Herald Investment
Assuming the 90 days trading horizon Aston Martin Lagonda is expected to under-perform the Herald Investment. In addition to that, Aston Martin is 2.52 times more volatile than Herald Investment Trust. It trades about -0.16 of its total potential returns per unit of risk. Herald Investment Trust is currently generating about 0.49 per unit of volatility. If you would invest 209,500 in Herald Investment Trust on September 4, 2024 and sell it today you would earn a total of 27,500 from holding Herald Investment Trust or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aston Martin Lagonda vs. Herald Investment Trust
Performance |
| Timeline |
| Aston Martin Lagonda |
| Herald Investment Trust |
Aston Martin and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aston Martin and Herald Investment
The main advantage of trading using opposite Aston Martin and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aston Martin position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| Aston Martin vs. AfriTin Mining | Aston Martin vs. Cornish Metals | Aston Martin vs. Panther Metals PLC | Aston Martin vs. Supermarket Income REIT |
| Herald Investment vs. SupplyMe Capital PLC | Herald Investment vs. Lloyds Banking Group | Herald Investment vs. Premier African Minerals | Herald Investment vs. SANTANDER UK 8 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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