Correlation Between Black Hills and Custom Truck
Can any of the company-specific risk be diversified away by investing in both Black Hills and Custom Truck 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 Black Hills and Custom Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Custom Truck One, you can compare the effects of market volatilities on Black Hills and Custom Truck 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 Black Hills with a short position of Custom Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Custom Truck.
Diversification Opportunities for Black Hills and Custom Truck
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and Custom is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and Black Hills 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 Black Hills are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of Black Hills i.e., Black Hills and Custom Truck go up and down completely randomly.
Pair Corralation between Black Hills and Custom Truck
Considering the 90-day investment horizon Black Hills is expected to generate 7.07 times less return on investment than Custom Truck. But when comparing it to its historical volatility, Black Hills is 3.15 times less risky than Custom Truck. It trades about 0.27 of its potential returns per unit of risk. Custom Truck One is currently generating about 0.61 of returns per unit of risk over similar time horizon. If you would invest 324.00 in Custom Truck One on August 26, 2024 and sell it today you would earn a total of 248.00 from holding Custom Truck One or generate 76.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Custom Truck One
Performance |
| Timeline |
| Black Hills |
| Custom Truck One |
Black Hills and Custom Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Custom Truck
The main advantage of trading using opposite Black Hills and Custom Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Custom Truck 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 Custom Truck will offset losses from the drop in Custom Truck's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. Mega Matrix Corp | Custom Truck vs. FTAI Aviation Ltd |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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