Correlation Between Continental Beverage and Global Develpmts
Can any of the company-specific risk be diversified away by investing in both Continental Beverage and Global Develpmts 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 Continental Beverage and Global Develpmts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Beverage Brands and Global Develpmts, you can compare the effects of market volatilities on Continental Beverage and Global Develpmts 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 Continental Beverage with a short position of Global Develpmts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Beverage and Global Develpmts.
Diversification Opportunities for Continental Beverage and Global Develpmts
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Continental and Global is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Continental Beverage Brands and Global Develpmts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Develpmts and Continental Beverage 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 Continental Beverage Brands are associated (or correlated) with Global Develpmts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Develpmts has no effect on the direction of Continental Beverage i.e., Continental Beverage and Global Develpmts go up and down completely randomly.
Pair Corralation between Continental Beverage and Global Develpmts
Given the investment horizon of 90 days Continental Beverage Brands is expected to generate 16.69 times more return on investment than Global Develpmts. However, Continental Beverage is 16.69 times more volatile than Global Develpmts. It trades about 0.16 of its potential returns per unit of risk. Global Develpmts is currently generating about 0.06 per unit of risk. If you would invest 18.00 in Continental Beverage Brands on September 4, 2024 and sell it today you would earn a total of 57.00 from holding Continental Beverage Brands or generate 316.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Beverage Brands vs. Global Develpmts
Performance |
| Timeline |
| Continental Beverage |
| Global Develpmts |
Continental Beverage and Global Develpmts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Beverage and Global Develpmts
The main advantage of trading using opposite Continental Beverage and Global Develpmts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Beverage position performs unexpectedly, Global Develpmts 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 Global Develpmts will offset losses from the drop in Global Develpmts' long position.| Continental Beverage vs. Manaris Corp | Continental Beverage vs. Green Planet Bio | Continental Beverage vs. Opus Magnum Ameris |
| Global Develpmts vs. Manaris Corp | Global Develpmts vs. Green Planet Bio | Global Develpmts vs. Continental Beverage Brands | Global Develpmts vs. Opus Magnum Ameris |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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