Correlation Between Caledonia Investments and United States
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments and United States 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 Caledonia Investments and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and United States Steel, you can compare the effects of market volatilities on Caledonia Investments and United States 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 Caledonia Investments with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and United States.
Diversification Opportunities for Caledonia Investments and United States
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caledonia and United is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Caledonia Investments 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 Caledonia Investments are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Caledonia Investments i.e., Caledonia Investments and United States go up and down completely randomly.
Pair Corralation between Caledonia Investments and United States
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 0.28 times more return on investment than United States. However, Caledonia Investments is 3.51 times less risky than United States. It trades about 0.13 of its potential returns per unit of risk. United States Steel is currently generating about 0.03 per unit of risk. If you would invest 340,005 in Caledonia Investments on October 31, 2024 and sell it today you would earn a total of 32,995 from holding Caledonia Investments or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.82% |
| Values | Daily Returns |
Caledonia Investments vs. United States Steel
Performance |
| Timeline |
| Caledonia Investments |
| United States Steel |
Caledonia Investments and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and United States
The main advantage of trading using opposite Caledonia Investments and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Caledonia Investments vs. Gaztransport et Technigaz | Caledonia Investments vs. Smithson Investment Trust | Caledonia Investments vs. EJF Investments | Caledonia Investments vs. JD Sports Fashion |
| United States vs. Scandic Hotels Group | United States vs. Host Hotels Resorts | United States vs. Pressure Technologies Plc | United States vs. Take Two Interactive Software |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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