Correlation Between Congress Large and Ppm High
Can any of the company-specific risk be diversified away by investing in both Congress Large and Ppm High 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 Congress Large and Ppm High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Congress Large Cap and Ppm High Yield, you can compare the effects of market volatilities on Congress Large and Ppm High 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 Congress Large with a short position of Ppm High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Congress Large and Ppm High.
Diversification Opportunities for Congress Large and Ppm High
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Congress and Ppm is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Congress Large Cap and Ppm High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ppm High Yield and Congress Large 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 Congress Large Cap are associated (or correlated) with Ppm High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ppm High Yield has no effect on the direction of Congress Large i.e., Congress Large and Ppm High go up and down completely randomly.
Pair Corralation between Congress Large and Ppm High
Assuming the 90 days horizon Congress Large Cap is expected to generate 4.58 times more return on investment than Ppm High. However, Congress Large is 4.58 times more volatile than Ppm High Yield. It trades about 0.15 of its potential returns per unit of risk. Ppm High Yield is currently generating about -0.19 per unit of risk. If you would invest 5,049 in Congress Large Cap on September 12, 2024 and sell it today you would earn a total of 125.00 from holding Congress Large Cap or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Congress Large Cap vs. Ppm High Yield
Performance |
| Timeline |
| Congress Large Cap |
| Ppm High Yield |
Congress Large and Ppm High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Congress Large and Ppm High
The main advantage of trading using opposite Congress Large and Ppm High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Congress Large position performs unexpectedly, Ppm High 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 Ppm High will offset losses from the drop in Ppm High's long position.| Congress Large vs. Ppm High Yield | Congress Large vs. Pace High Yield | Congress Large vs. Ab Global Risk | Congress Large vs. Alliancebernstein Global High |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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