Correlation Between Aluminumof China and NetApp
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and NetApp 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 Aluminumof China and NetApp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and NetApp Inc, you can compare the effects of market volatilities on Aluminumof China and NetApp 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 Aluminumof China with a short position of NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and NetApp.
Diversification Opportunities for Aluminumof China and NetApp
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aluminumof and NetApp is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Aluminumof China 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 Aluminum of are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Aluminumof China i.e., Aluminumof China and NetApp go up and down completely randomly.
Pair Corralation between Aluminumof China and NetApp
Assuming the 90 days horizon Aluminum of is expected to generate 1.5 times more return on investment than NetApp. However, Aluminumof China is 1.5 times more volatile than NetApp Inc. It trades about 0.1 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.11 per unit of risk. If you would invest 57.00 in Aluminum of on November 4, 2024 and sell it today you would earn a total of 3.00 from holding Aluminum of or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aluminum of vs. NetApp Inc
Performance |
| Timeline |
| Aluminumof China |
| NetApp Inc |
Aluminumof China and NetApp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and NetApp
The main advantage of trading using opposite Aluminumof China and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, NetApp 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 NetApp will offset losses from the drop in NetApp's long position.| Aluminumof China vs. Highlight Communications AG | Aluminumof China vs. SK TELECOM TDADR | Aluminumof China vs. PRECISION DRILLING P | Aluminumof China vs. Singapore Telecommunications Limited |
| NetApp vs. Casio Computer CoLtd | NetApp vs. COMPUTERSHARE | NetApp vs. Webster Financial | NetApp vs. BANKINTER ADR 2007 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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