Correlation Between Cencora and Newlake Capital
Can any of the company-specific risk be diversified away by investing in both Cencora and Newlake Capital 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 Cencora and Newlake Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cencora and Newlake Capital Partners, you can compare the effects of market volatilities on Cencora and Newlake Capital 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 Cencora with a short position of Newlake Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cencora and Newlake Capital.
Diversification Opportunities for Cencora and Newlake Capital
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cencora and Newlake is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cencora and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners and Cencora 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 Cencora are associated (or correlated) with Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Cencora i.e., Cencora and Newlake Capital go up and down completely randomly.
Pair Corralation between Cencora and Newlake Capital
Considering the 90-day investment horizon Cencora is expected to generate 0.78 times more return on investment than Newlake Capital. However, Cencora is 1.28 times less risky than Newlake Capital. It trades about 0.16 of its potential returns per unit of risk. Newlake Capital Partners is currently generating about -0.1 per unit of risk. If you would invest 23,399 in Cencora on August 24, 2024 and sell it today you would earn a total of 1,170 from holding Cencora or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cencora vs. Newlake Capital Partners
Performance |
| Timeline |
| Cencora |
| Newlake Capital Partners |
Cencora and Newlake Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cencora and Newlake Capital
The main advantage of trading using opposite Cencora and Newlake Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cencora position performs unexpectedly, Newlake Capital 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 Newlake Capital will offset losses from the drop in Newlake Capital's long position.| Cencora vs. Avis Budget Group | Cencora vs. China Aircraft Leasing | Cencora vs. Welsbach Technology Metals | Cencora vs. Uranium Energy Corp |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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