Correlation Between Charter Communications and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Mohawk Industries 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 Charter Communications and Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Mohawk Industries, you can compare the effects of market volatilities on Charter Communications and Mohawk Industries 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 Charter Communications with a short position of Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Mohawk Industries.
Diversification Opportunities for Charter Communications and Mohawk Industries
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Charter and Mohawk is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries and Charter Communications 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 Charter Communications are associated (or correlated) with Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of Charter Communications i.e., Charter Communications and Mohawk Industries go up and down completely randomly.
Pair Corralation between Charter Communications and Mohawk Industries
Assuming the 90 days trading horizon Charter Communications is expected to under-perform the Mohawk Industries. In addition to that, Charter Communications is 1.19 times more volatile than Mohawk Industries. It trades about -0.06 of its total potential returns per unit of risk. Mohawk Industries is currently generating about -0.06 per unit of volatility. If you would invest 13,000 in Mohawk Industries on October 30, 2024 and sell it today you would lose (600.00) from holding Mohawk Industries or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications vs. Mohawk Industries
Performance |
| Timeline |
| Charter Communications |
| Mohawk Industries |
Charter Communications and Mohawk Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Mohawk Industries
The main advantage of trading using opposite Charter Communications and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.| Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc |
| Mohawk Industries vs. Qingdao Haier Co | Mohawk Industries vs. SEB SA | Mohawk Industries vs. Derwent London PLC | Mohawk Industries vs. ELECTROLUX B ADR2 |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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