Correlation Between Commercial Vehicle and Douglas Dynamics
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and Douglas Dynamics 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 Commercial Vehicle and Douglas Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and Douglas Dynamics, you can compare the effects of market volatilities on Commercial Vehicle and Douglas Dynamics 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 Commercial Vehicle with a short position of Douglas Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Douglas Dynamics.
Diversification Opportunities for Commercial Vehicle and Douglas Dynamics
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commercial and Douglas is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Douglas Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Dynamics and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Douglas Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Dynamics has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Douglas Dynamics go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Douglas Dynamics
Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the Douglas Dynamics. In addition to that, Commercial Vehicle is 3.37 times more volatile than Douglas Dynamics. It trades about -0.07 of its total potential returns per unit of risk. Douglas Dynamics is currently generating about 0.14 per unit of volatility. If you would invest 2,473 in Douglas Dynamics on November 18, 2024 and sell it today you would earn a total of 93.00 from holding Douglas Dynamics or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. Douglas Dynamics
Performance |
| Timeline |
| Commercial Vehicle |
| Douglas Dynamics |
Commercial Vehicle and Douglas Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Douglas Dynamics
The main advantage of trading using opposite Commercial Vehicle and Douglas Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, Douglas Dynamics 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 Douglas Dynamics will offset losses from the drop in Douglas Dynamics' long position.| Commercial Vehicle vs. Motorcar Parts of | Commercial Vehicle vs. Monro Muffler Brake | Commercial Vehicle vs. Stoneridge | Commercial Vehicle vs. Superior Industries International |
| Douglas Dynamics vs. Monro Muffler Brake | Douglas Dynamics vs. Motorcar Parts of | Douglas Dynamics vs. Standard Motor Products | Douglas Dynamics vs. Stoneridge |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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