Correlation Between Awilco Drilling and Timken
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and Timken 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 Awilco Drilling and Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco Drilling PLC and Timken Company, you can compare the effects of market volatilities on Awilco Drilling and Timken 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 Awilco Drilling with a short position of Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Timken.
Diversification Opportunities for Awilco Drilling and Timken
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Awilco and Timken is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company and Awilco Drilling 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 Awilco Drilling PLC are associated (or correlated) with Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Timken go up and down completely randomly.
Pair Corralation between Awilco Drilling and Timken
Assuming the 90 days horizon Awilco Drilling PLC is expected to generate 29.57 times more return on investment than Timken. However, Awilco Drilling is 29.57 times more volatile than Timken Company. It trades about 0.06 of its potential returns per unit of risk. Timken Company is currently generating about 0.0 per unit of risk. If you would invest 1,000.00 in Awilco Drilling PLC on August 31, 2024 and sell it today you would lose (808.00) from holding Awilco Drilling PLC or give up 80.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Awilco Drilling PLC vs. Timken Company
Performance |
| Timeline |
| Awilco Drilling PLC |
| Timken Company |
Awilco Drilling and Timken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco Drilling and Timken
The main advantage of trading using opposite Awilco Drilling and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.| Awilco Drilling vs. Oasis Hotel Resort | Awilco Drilling vs. Dine Brands Global | Awilco Drilling vs. Park Hotels Resorts | Awilco Drilling vs. Insteel Industries |
| Timken vs. AMCON Distributing | Timken vs. Espey Mfg Electronics | Timken vs. Servotronics | Timken vs. CompX International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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