Correlation Between CMDKF and All For
Can any of the company-specific risk be diversified away by investing in both CMDKF and All For 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 CMDKF and All For into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMDKF and All For One, you can compare the effects of market volatilities on CMDKF and All For 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 CMDKF with a short position of All For. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMDKF and All For.
Diversification Opportunities for CMDKF and All For
No risk reduction
The 3 months correlation between CMDKF and All is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding CMDKF and All For One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All For One and CMDKF 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 CMDKF are associated (or correlated) with All For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All For One has no effect on the direction of CMDKF i.e., CMDKF and All For go up and down completely randomly.
Pair Corralation between CMDKF and All For
Assuming the 90 days horizon CMDKF is expected to generate 2334.92 times less return on investment than All For. But when comparing it to its historical volatility, CMDKF is 502.22 times less risky than All For. It trades about 0.04 of its potential returns per unit of risk. All For One is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 57.00 in All For One on August 30, 2024 and sell it today you would lose (56.99) from holding All For One or give up 99.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMDKF vs. All For One
Performance |
| Timeline |
| CMDKF |
| All For One |
CMDKF and All For Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMDKF and All For
The main advantage of trading using opposite CMDKF and All For positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMDKF position performs unexpectedly, All For 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 All For will offset losses from the drop in All For's long position.The idea behind CMDKF and All For One 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.| All For vs. Warner Music Group | All For vs. Live Nation Entertainment | All For vs. Atlanta Braves Holdings, | All For vs. Warner Bros Discovery |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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