Correlation Between Coty and Aquagold International
Can any of the company-specific risk be diversified away by investing in both Coty and Aquagold International 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 Coty and Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and Aquagold International, you can compare the effects of market volatilities on Coty and Aquagold International 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 Coty with a short position of Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Aquagold International.
Diversification Opportunities for Coty and Aquagold International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coty and Aquagold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Coty 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 Coty Inc are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Coty i.e., Coty and Aquagold International go up and down completely randomly.
Pair Corralation between Coty and Aquagold International
Given the investment horizon of 90 days Coty Inc is expected to under-perform the Aquagold International. But the stock apears to be less risky and, when comparing its historical volatility, Coty Inc is 2.77 times less risky than Aquagold International. The stock trades about -0.08 of its potential returns per unit of risk. The Aquagold International is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2.10 in Aquagold International on September 2, 2024 and sell it today you would lose (1.50) from holding Aquagold International or give up 71.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coty Inc vs. Aquagold International
Performance |
| Timeline |
| Coty Inc |
| Aquagold International |
Coty and Aquagold International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and Aquagold International
The main advantage of trading using opposite Coty and Aquagold International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, Aquagold International 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 Aquagold International will offset losses from the drop in Aquagold International's long position.The idea behind Coty Inc and Aquagold International 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.| Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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