Correlation Between Arts Way and Austin Engineering
Can any of the company-specific risk be diversified away by investing in both Arts Way and Austin Engineering 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 Arts Way and Austin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arts Way Manufacturing Co and Austin Engineering Limited, you can compare the effects of market volatilities on Arts Way and Austin Engineering 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 Arts Way with a short position of Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and Austin Engineering.
Diversification Opportunities for Arts Way and Austin Engineering
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arts and Austin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering and Arts Way 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 Arts Way Manufacturing Co are associated (or correlated) with Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of Arts Way i.e., Arts Way and Austin Engineering go up and down completely randomly.
Pair Corralation between Arts Way and Austin Engineering
If you would invest 161.00 in Arts Way Manufacturing Co on August 25, 2024 and sell it today you would earn a total of 10.00 from holding Arts Way Manufacturing Co or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Arts Way Manufacturing Co vs. Austin Engineering Limited
Performance |
| Timeline |
| Arts Way Manufacturing |
| Austin Engineering |
Arts Way and Austin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arts Way and Austin Engineering
The main advantage of trading using opposite Arts Way and Austin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arts Way position performs unexpectedly, Austin Engineering 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 Austin Engineering will offset losses from the drop in Austin Engineering's long position.| Arts Way vs. First Tractor | Arts Way vs. Ag Growth International | Arts Way vs. AmeraMex International | Arts Way vs. American Premium Water |
| Austin Engineering vs. American Premium Water | Austin Engineering vs. AmeraMex International | Austin Engineering vs. Arts Way Manufacturing Co | Austin Engineering vs. Astec Industries |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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