Correlation Between Automotive Stampings and Generic Engineering
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By analyzing existing cross correlation between Automotive Stampings and and Generic Engineering Construction, you can compare the effects of market volatilities on Automotive Stampings and Generic 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 Automotive Stampings with a short position of Generic Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Stampings and Generic Engineering.
Diversification Opportunities for Automotive Stampings and Generic Engineering
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automotive and Generic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Stampings and and Generic Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Engineering and Automotive Stampings 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 Automotive Stampings and are associated (or correlated) with Generic Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Engineering has no effect on the direction of Automotive Stampings i.e., Automotive Stampings and Generic Engineering go up and down completely randomly.
Pair Corralation between Automotive Stampings and Generic Engineering
Assuming the 90 days trading horizon Automotive Stampings and is expected to under-perform the Generic Engineering. In addition to that, Automotive Stampings is 1.39 times more volatile than Generic Engineering Construction. It trades about -0.24 of its total potential returns per unit of risk. Generic Engineering Construction is currently generating about -0.23 per unit of volatility. If you would invest 4,431 in Generic Engineering Construction on November 3, 2024 and sell it today you would lose (557.00) from holding Generic Engineering Construction or give up 12.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automotive Stampings and vs. Generic Engineering Constructi
Performance |
| Timeline |
| Automotive Stampings and |
| Generic Engineering |
Automotive Stampings and Generic Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automotive Stampings and Generic Engineering
The main advantage of trading using opposite Automotive Stampings and Generic Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automotive Stampings position performs unexpectedly, Generic 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 Generic Engineering will offset losses from the drop in Generic Engineering's long position.The idea behind Automotive Stampings and and Generic Engineering Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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