Correlation Between Buhler Industries and Stella Jones
Can any of the company-specific risk be diversified away by investing in both Buhler Industries and Stella Jones 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 Stella Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buhler Industries and Stella Jones, you can compare the effects of market volatilities on Buhler Industries and Stella Jones 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 Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buhler Industries and Stella Jones.
Diversification Opportunities for Buhler Industries and Stella Jones
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Buhler and Stella is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Buhler Industries and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Buhler Industries i.e., Buhler Industries and Stella Jones go up and down completely randomly.
Pair Corralation between Buhler Industries and Stella Jones
Assuming the 90 days trading horizon Buhler Industries is expected to generate 1.6 times more return on investment than Stella Jones. However, Buhler Industries is 1.6 times more volatile than Stella Jones. It trades about 0.05 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 per unit of risk. If you would invest 180.00 in Buhler Industries on September 4, 2024 and sell it today you would earn a total of 108.00 from holding Buhler Industries or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buhler Industries vs. Stella Jones
Performance |
| Timeline |
| Buhler Industries |
| Stella Jones |
Buhler Industries and Stella Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buhler Industries and Stella Jones
The main advantage of trading using opposite Buhler Industries and Stella Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buhler Industries position performs unexpectedly, Stella Jones 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 Stella Jones will offset losses from the drop in Stella Jones' long position.| Buhler Industries vs. Clarke Inc | Buhler Industries vs. Accord Financial Corp | Buhler Industries vs. ADF Group | Buhler Industries vs. Algoma Central |
| Stella Jones vs. Richelieu Hardware | Stella Jones vs. CCL Industries | Stella Jones vs. Stantec | Stella Jones vs. Gildan Activewear |
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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