Correlation Between Avalon Holdings and Majic Wheels
Can any of the company-specific risk be diversified away by investing in both Avalon Holdings and Majic Wheels 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 Majic Wheels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalon Holdings and Majic Wheels Corp, you can compare the effects of market volatilities on Avalon Holdings and Majic Wheels 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 Majic Wheels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalon Holdings and Majic Wheels.
Diversification Opportunities for Avalon Holdings and Majic Wheels
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avalon and Majic is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Holdings and Majic Wheels Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Majic Wheels Corp 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 Majic Wheels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Majic Wheels Corp has no effect on the direction of Avalon Holdings i.e., Avalon Holdings and Majic Wheels go up and down completely randomly.
Pair Corralation between Avalon Holdings and Majic Wheels
Considering the 90-day investment horizon Avalon Holdings is expected to generate 12.56 times less return on investment than Majic Wheels. But when comparing it to its historical volatility, Avalon Holdings is 9.18 times less risky than Majic Wheels. It trades about 0.07 of its potential returns per unit of risk. Majic Wheels Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.06 in Majic Wheels Corp on September 1, 2024 and sell it today you would lose (0.05) from holding Majic Wheels Corp or give up 83.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.4% |
| Values | Daily Returns |
Avalon Holdings vs. Majic Wheels Corp
Performance |
| Timeline |
| Avalon Holdings |
| Majic Wheels Corp |
Avalon Holdings and Majic Wheels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avalon Holdings and Majic Wheels
The main advantage of trading using opposite Avalon Holdings and Majic Wheels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalon Holdings position performs unexpectedly, Majic Wheels 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 Majic Wheels will offset losses from the drop in Majic Wheels' long position.| Avalon Holdings vs. CRA International | Avalon Holdings vs. ICF International | Avalon Holdings vs. Forrester Research | Avalon Holdings vs. Huron Consulting Group |
| Majic Wheels vs. Houston Natural Resources | Majic Wheels vs. BluMetric Environmental | Majic Wheels vs. Ecoloclean Industrs | Majic Wheels vs. BQE Water |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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