Correlation Between Cascadero Copper and AAP
Can any of the company-specific risk be diversified away by investing in both Cascadero Copper and AAP 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 Cascadero Copper and AAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cascadero Copper and AAP Inc, you can compare the effects of market volatilities on Cascadero Copper and AAP 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 Cascadero Copper with a short position of AAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cascadero Copper and AAP.
Diversification Opportunities for Cascadero Copper and AAP
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cascadero and AAP is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cascadero Copper and AAP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAP Inc and Cascadero Copper 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 Cascadero Copper are associated (or correlated) with AAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAP Inc has no effect on the direction of Cascadero Copper i.e., Cascadero Copper and AAP go up and down completely randomly.
Pair Corralation between Cascadero Copper and AAP
Assuming the 90 days horizon Cascadero Copper is expected to generate 1.53 times less return on investment than AAP. In addition to that, Cascadero Copper is 1.12 times more volatile than AAP Inc. It trades about 0.08 of its total potential returns per unit of risk. AAP Inc is currently generating about 0.14 per unit of volatility. If you would invest 0.02 in AAP Inc on September 1, 2024 and sell it today you would earn a total of 0.00 from holding AAP Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Cascadero Copper vs. AAP Inc
Performance |
| Timeline |
| Cascadero Copper |
| AAP Inc |
Cascadero Copper and AAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cascadero Copper and AAP
The main advantage of trading using opposite Cascadero Copper and AAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cascadero Copper position performs unexpectedly, AAP 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 AAP will offset losses from the drop in AAP's long position.| Cascadero Copper vs. ATT Inc | Cascadero Copper vs. Merck Company | Cascadero Copper vs. Walt Disney | Cascadero Copper vs. Caterpillar |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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