Correlation Between Cadre Holdings and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both Cadre Holdings and Alabama Aircraft 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 Cadre Holdings and Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadre Holdings and Alabama Aircraft Industries, you can compare the effects of market volatilities on Cadre Holdings and Alabama Aircraft 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 Cadre Holdings with a short position of Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadre Holdings and Alabama Aircraft.
Diversification Opportunities for Cadre Holdings and Alabama Aircraft
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cadre and Alabama is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cadre Holdings and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind and Cadre Holdings 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 Cadre Holdings are associated (or correlated) with Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of Cadre Holdings i.e., Cadre Holdings and Alabama Aircraft go up and down completely randomly.
Pair Corralation between Cadre Holdings and Alabama Aircraft
Given the investment horizon of 90 days Cadre Holdings is expected to generate 0.13 times more return on investment than Alabama Aircraft. However, Cadre Holdings is 7.74 times less risky than Alabama Aircraft. It trades about 0.05 of its potential returns per unit of risk. Alabama Aircraft Industries is currently generating about -0.16 per unit of risk. If you would invest 2,152 in Cadre Holdings on September 2, 2024 and sell it today you would earn a total of 1,187 from holding Cadre Holdings or generate 55.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.06% |
| Values | Daily Returns |
Cadre Holdings vs. Alabama Aircraft Industries
Performance |
| Timeline |
| Cadre Holdings |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cadre Holdings and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadre Holdings and Alabama Aircraft
The main advantage of trading using opposite Cadre Holdings and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadre Holdings position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.| Cadre Holdings vs. European Wax Center | Cadre Holdings vs. Enfusion | Cadre Holdings vs. CiT Inc | Cadre Holdings vs. Core Main |
| Alabama Aircraft vs. BRP Inc | Alabama Aircraft vs. Universal Display | Alabama Aircraft vs. Sonos Inc | Alabama Aircraft vs. Funko Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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