Correlation Between CAIRN HOMES and Gaming
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES and Gaming 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 CAIRN HOMES and Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and Gaming and Leisure, you can compare the effects of market volatilities on CAIRN HOMES and Gaming 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 CAIRN HOMES with a short position of Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and Gaming.
Diversification Opportunities for CAIRN HOMES and Gaming
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between CAIRN and Gaming is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and Gaming go up and down completely randomly.
Pair Corralation between CAIRN HOMES and Gaming
Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 1.86 times more return on investment than Gaming. However, CAIRN HOMES is 1.86 times more volatile than Gaming and Leisure. It trades about 0.1 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.05 per unit of risk. If you would invest 100.00 in CAIRN HOMES EO on October 30, 2024 and sell it today you would earn a total of 113.00 from holding CAIRN HOMES EO or generate 113.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAIRN HOMES EO vs. Gaming and Leisure
Performance |
| Timeline |
| CAIRN HOMES EO |
| Gaming and Leisure |
CAIRN HOMES and Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and Gaming
The main advantage of trading using opposite CAIRN HOMES and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.| CAIRN HOMES vs. Endeavour Mining PLC | CAIRN HOMES vs. INTER CARS SA | CAIRN HOMES vs. Cars Inc | CAIRN HOMES vs. Monument Mining Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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