Correlation Between Cable One and PPLA Participations
Can any of the company-specific risk be diversified away by investing in both Cable One and PPLA Participations 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 Cable One and PPLA Participations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and PPLA Participations, you can compare the effects of market volatilities on Cable One and PPLA Participations 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 Cable One with a short position of PPLA Participations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and PPLA Participations.
Diversification Opportunities for Cable One and PPLA Participations
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cable and PPLA is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and PPLA Participations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPLA Participations and Cable One 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 Cable One are associated (or correlated) with PPLA Participations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPLA Participations has no effect on the direction of Cable One i.e., Cable One and PPLA Participations go up and down completely randomly.
Pair Corralation between Cable One and PPLA Participations
Assuming the 90 days trading horizon Cable One is expected to generate 0.76 times more return on investment than PPLA Participations. However, Cable One is 1.32 times less risky than PPLA Participations. It trades about -0.02 of its potential returns per unit of risk. PPLA Participations is currently generating about -0.02 per unit of risk. If you would invest 1,530 in Cable One on August 29, 2024 and sell it today you would lose (306.00) from holding Cable One or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 59.03% |
| Values | Daily Returns |
Cable One vs. PPLA Participations
Performance |
| Timeline |
| Cable One |
| PPLA Participations |
Cable One and PPLA Participations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and PPLA Participations
The main advantage of trading using opposite Cable One and PPLA Participations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, PPLA Participations 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 PPLA Participations will offset losses from the drop in PPLA Participations' long position.| Cable One vs. Unity Software | Cable One vs. Verizon Communications | Cable One vs. Paycom Software | Cable One vs. Extra Space Storage |
| PPLA Participations vs. RB Capital Office | PPLA Participations vs. Ishares Msci Brazil | PPLA Participations vs. Investo Etf Global | PPLA Participations vs. iShares BMFBovespa Small |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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