Correlation Between Culp and Albany International
Can any of the company-specific risk be diversified away by investing in both Culp and Albany 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 Culp and Albany International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Culp Inc and Albany International, you can compare the effects of market volatilities on Culp and Albany 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 Culp with a short position of Albany International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Culp and Albany International.
Diversification Opportunities for Culp and Albany International
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Culp and Albany is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Culp Inc and Albany International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albany International and Culp 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 Culp Inc are associated (or correlated) with Albany International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albany International has no effect on the direction of Culp i.e., Culp and Albany International go up and down completely randomly.
Pair Corralation between Culp and Albany International
Given the investment horizon of 90 days Culp Inc is expected to under-perform the Albany International. But the stock apears to be less risky and, when comparing its historical volatility, Culp Inc is 1.73 times less risky than Albany International. The stock trades about -0.2 of its potential returns per unit of risk. The Albany International is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 7,225 in Albany International on August 27, 2024 and sell it today you would earn a total of 1,253 from holding Albany International or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Culp Inc vs. Albany International
Performance |
| Timeline |
| Culp Inc |
| Albany International |
Culp and Albany International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Culp and Albany International
The main advantage of trading using opposite Culp and Albany International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Culp position performs unexpectedly, Albany 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 Albany International will offset losses from the drop in Albany International's long position.The idea behind Culp Inc and Albany 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.| Albany International vs. Culp Inc | Albany International vs. Unifi Inc | Albany International vs. Toray Industries |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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