Correlation Between Cool and Matson
Can any of the company-specific risk be diversified away by investing in both Cool and Matson 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 Cool and Matson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cool Company and Matson Inc, you can compare the effects of market volatilities on Cool and Matson 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 Cool with a short position of Matson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cool and Matson.
Diversification Opportunities for Cool and Matson
Poor diversification
The 3 months correlation between Cool and Matson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cool Company and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc and Cool 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 Cool Company are associated (or correlated) with Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Cool i.e., Cool and Matson go up and down completely randomly.
Pair Corralation between Cool and Matson
Given the investment horizon of 90 days Cool Company is expected to under-perform the Matson. In addition to that, Cool is 1.14 times more volatile than Matson Inc. It trades about -0.04 of its total potential returns per unit of risk. Matson Inc is currently generating about 0.06 per unit of volatility. If you would invest 6,417 in Matson Inc on January 13, 2025 and sell it today you would earn a total of 3,824 from holding Matson Inc or generate 59.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cool Company vs. Matson Inc
Performance |
| Timeline |
| Cool Company |
| Matson Inc |
Cool and Matson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cool and Matson
The main advantage of trading using opposite Cool and Matson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cool position performs unexpectedly, Matson 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 Matson will offset losses from the drop in Matson's long position.| Cool vs. Vinci Partners Investments | Cool vs. Erf Wireless | Cool vs. Greentown Management Holdings | Cool vs. Precision Optics, |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |