Correlation Between Avalon Holdings and Exponent
Can any of the company-specific risk be diversified away by investing in both Avalon Holdings and Exponent 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 Avalon Holdings and Exponent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalon Holdings and Exponent, you can compare the effects of market volatilities on Avalon Holdings and Exponent 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 Avalon Holdings with a short position of Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalon Holdings and Exponent.
Diversification Opportunities for Avalon Holdings and Exponent
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avalon and Exponent is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Avalon Holdings 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 Avalon Holdings are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and Exponent go up and down completely randomly.
Pair Corralation between Avalon Holdings and Exponent
Considering the 90-day investment horizon Avalon Holdings is expected to generate 3.67 times more return on investment than Exponent. However, Avalon Holdings is 3.67 times more volatile than Exponent. It trades about 0.14 of its potential returns per unit of risk. Exponent is currently generating about 0.08 per unit of risk. If you would invest 320.00 in Avalon Holdings on October 20, 2024 and sell it today you would earn a total of 32.00 from holding Avalon Holdings or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avalon Holdings vs. Exponent
Performance |
| Timeline |
| Avalon Holdings |
| Exponent |
Avalon Holdings and Exponent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avalon Holdings and Exponent
The main advantage of trading using opposite Avalon Holdings and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalon Holdings position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.| Avalon Holdings vs. Agilyx AS | Avalon Holdings vs. BQE Water | Avalon Holdings vs. EcoPlus | Avalon Holdings vs. Anaergia |
| Exponent vs. CRA International | Exponent vs. Huron Consulting Group | Exponent vs. Forrester Research | Exponent vs. Resources Connection |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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