Correlation Between Buhler Industries and Clarke
Can any of the company-specific risk be diversified away by investing in both Buhler Industries and Clarke 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 Buhler Industries and Clarke into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buhler Industries and Clarke Inc, you can compare the effects of market volatilities on Buhler Industries and Clarke 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 Buhler Industries with a short position of Clarke. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buhler Industries and Clarke.
Diversification Opportunities for Buhler Industries and Clarke
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Buhler and Clarke is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries and Clarke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarke Inc and Buhler Industries 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 Buhler Industries are associated (or correlated) with Clarke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarke Inc has no effect on the direction of Buhler Industries i.e., Buhler Industries and Clarke go up and down completely randomly.
Pair Corralation between Buhler Industries and Clarke
Assuming the 90 days trading horizon Buhler Industries is expected to generate 15.09 times more return on investment than Clarke. However, Buhler Industries is 15.09 times more volatile than Clarke Inc. It trades about 0.19 of its potential returns per unit of risk. Clarke Inc is currently generating about -0.23 per unit of risk. If you would invest 245.00 in Buhler Industries on August 24, 2024 and sell it today you would earn a total of 43.00 from holding Buhler Industries or generate 17.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buhler Industries vs. Clarke Inc
Performance |
| Timeline |
| Buhler Industries |
| Clarke Inc |
Buhler Industries and Clarke Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buhler Industries and Clarke
The main advantage of trading using opposite Buhler Industries and Clarke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buhler Industries position performs unexpectedly, Clarke 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 Clarke will offset losses from the drop in Clarke's long position.| Buhler Industries vs. Clarke Inc | Buhler Industries vs. Accord Financial Corp | Buhler Industries vs. ADF Group | Buhler Industries vs. Algoma Central |
| Clarke vs. Nickel Creek Platinum | Clarke vs. Converge Technology Solutions | Clarke vs. Canlan Ice Sports | Clarke vs. Forsys Metals Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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