Correlation Between Chiba Bank and PETCO HEALTH
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and PETCO HEALTH 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 Chiba Bank and PETCO HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and PETCO HEALTH CLA, you can compare the effects of market volatilities on Chiba Bank and PETCO HEALTH 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 Chiba Bank with a short position of PETCO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and PETCO HEALTH.
Diversification Opportunities for Chiba Bank and PETCO HEALTH
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chiba and PETCO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and PETCO HEALTH CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETCO HEALTH CLA and Chiba Bank 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 Chiba Bank are associated (or correlated) with PETCO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETCO HEALTH CLA has no effect on the direction of Chiba Bank i.e., Chiba Bank and PETCO HEALTH go up and down completely randomly.
Pair Corralation between Chiba Bank and PETCO HEALTH
Assuming the 90 days horizon Chiba Bank is expected to generate 2.71 times less return on investment than PETCO HEALTH. But when comparing it to its historical volatility, Chiba Bank is 3.32 times less risky than PETCO HEALTH. It trades about 0.13 of its potential returns per unit of risk. PETCO HEALTH CLA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 419.00 in PETCO HEALTH CLA on September 12, 2024 and sell it today you would earn a total of 50.00 from holding PETCO HEALTH CLA or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chiba Bank vs. PETCO HEALTH CLA
Performance |
| Timeline |
| Chiba Bank |
| PETCO HEALTH CLA |
Chiba Bank and PETCO HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and PETCO HEALTH
The main advantage of trading using opposite Chiba Bank and PETCO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, PETCO HEALTH 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 PETCO HEALTH will offset losses from the drop in PETCO HEALTH's long position.The idea behind Chiba Bank and PETCO HEALTH CLA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PETCO HEALTH vs. Tradegate AG Wertpapierhandelsbank | PETCO HEALTH vs. Darden Restaurants | PETCO HEALTH vs. Salesforce | PETCO HEALTH vs. PACIFIC ONLINE |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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