Correlation Between Centaur Media and North Atlantic
Can any of the company-specific risk be diversified away by investing in both Centaur Media and North Atlantic 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 Centaur Media and North Atlantic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaur Media and North Atlantic Smaller, you can compare the effects of market volatilities on Centaur Media and North Atlantic 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 Centaur Media with a short position of North Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Media and North Atlantic.
Diversification Opportunities for Centaur Media and North Atlantic
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Centaur and North is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media and North Atlantic Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Atlantic Smaller and Centaur Media 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 Centaur Media are associated (or correlated) with North Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Atlantic Smaller has no effect on the direction of Centaur Media i.e., Centaur Media and North Atlantic go up and down completely randomly.
Pair Corralation between Centaur Media and North Atlantic
Assuming the 90 days trading horizon Centaur Media is expected to under-perform the North Atlantic. In addition to that, Centaur Media is 1.6 times more volatile than North Atlantic Smaller. It trades about -0.15 of its total potential returns per unit of risk. North Atlantic Smaller is currently generating about -0.23 per unit of volatility. If you would invest 385,000 in North Atlantic Smaller on September 21, 2024 and sell it today you would lose (22,000) from holding North Atlantic Smaller or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaur Media vs. North Atlantic Smaller
Performance |
| Timeline |
| Centaur Media |
| North Atlantic Smaller |
Centaur Media and North Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaur Media and North Atlantic
The main advantage of trading using opposite Centaur Media and North Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media position performs unexpectedly, North Atlantic 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 North Atlantic will offset losses from the drop in North Atlantic's long position.| Centaur Media vs. Quantum Blockchain Technologies | Centaur Media vs. Versarien PLC | Centaur Media vs. Argo Group Limited | Centaur Media vs. Tungsten West PLC |
| North Atlantic vs. Take Two Interactive Software | North Atlantic vs. Catalyst Media Group | North Atlantic vs. Alfa Financial Software | North Atlantic vs. Centaur Media |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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