Correlation Between Coty and U-Haul Holding
Can any of the company-specific risk be diversified away by investing in both Coty and U-Haul Holding 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 U-Haul Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and U Haul Holding, you can compare the effects of market volatilities on Coty and U-Haul Holding 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 U-Haul Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and U-Haul Holding.
Diversification Opportunities for Coty and U-Haul Holding
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coty and U-Haul is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding 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 U-Haul Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of Coty i.e., Coty and U-Haul Holding go up and down completely randomly.
Pair Corralation between Coty and U-Haul Holding
Given the investment horizon of 90 days Coty is expected to generate 5.15 times less return on investment than U-Haul Holding. In addition to that, Coty is 1.01 times more volatile than U Haul Holding. It trades about 0.0 of its total potential returns per unit of risk. U Haul Holding is currently generating about 0.02 per unit of volatility. If you would invest 5,768 in U Haul Holding on September 4, 2024 and sell it today you would earn a total of 593.00 from holding U Haul Holding or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coty Inc vs. U Haul Holding
Performance |
| Timeline |
| Coty Inc |
| U Haul Holding |
Coty and U-Haul Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and U-Haul Holding
The main advantage of trading using opposite Coty and U-Haul Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, U-Haul Holding 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 U-Haul Holding will offset losses from the drop in U-Haul Holding's long position.The idea behind Coty Inc and U Haul Holding 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.| U-Haul Holding vs. Willamette Valley Vineyards | U-Haul Holding vs. Philip Morris International | U-Haul Holding vs. Turning Point Brands | U-Haul Holding vs. Westrock Coffee |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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