Correlation Between Carlson Investments and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Carlson Investments and Pepco Group 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 Carlson Investments and Pepco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlson Investments SA and Pepco Group BV, you can compare the effects of market volatilities on Carlson Investments and Pepco Group 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 Carlson Investments with a short position of Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlson Investments and Pepco Group.
Diversification Opportunities for Carlson Investments and Pepco Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carlson and Pepco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Carlson Investments SA and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV and Carlson Investments 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 Carlson Investments SA are associated (or correlated) with Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of Carlson Investments i.e., Carlson Investments and Pepco Group go up and down completely randomly.
Pair Corralation between Carlson Investments and Pepco Group
Assuming the 90 days trading horizon Carlson Investments SA is expected to under-perform the Pepco Group. In addition to that, Carlson Investments is 1.89 times more volatile than Pepco Group BV. It trades about -0.07 of its total potential returns per unit of risk. Pepco Group BV is currently generating about -0.06 per unit of volatility. If you would invest 3,988 in Pepco Group BV on August 30, 2024 and sell it today you would lose (2,374) from holding Pepco Group BV or give up 59.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlson Investments SA vs. Pepco Group BV
Performance |
| Timeline |
| Carlson Investments |
| Pepco Group BV |
Carlson Investments and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlson Investments and Pepco Group
The main advantage of trading using opposite Carlson Investments and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlson Investments position performs unexpectedly, Pepco Group 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 Pepco Group will offset losses from the drop in Pepco Group's long position.| Carlson Investments vs. Centrum Finansowe Banku | Carlson Investments vs. Asseco Business Solutions | Carlson Investments vs. Detalion Games SA | Carlson Investments vs. CFI Holding SA |
| Pepco Group vs. Carlson Investments SA | Pepco Group vs. Tower Investments SA | Pepco Group vs. Mercator Medical SA | Pepco Group vs. Bank Millennium SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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