Correlation Between Commercial Vehicle and Standard
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and Standard 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 Standard 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 Standard Motor Products, you can compare the effects of market volatilities on Commercial Vehicle and Standard 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 Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Standard.
Diversification Opportunities for Commercial Vehicle and Standard
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and Standard is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products 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 Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Standard go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Standard
Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the Standard. In addition to that, Commercial Vehicle is 1.57 times more volatile than Standard Motor Products. It trades about -0.09 of its total potential returns per unit of risk. Standard Motor Products is currently generating about 0.0 per unit of volatility. If you would invest 3,479 in Standard Motor Products on August 27, 2024 and sell it today you would lose (165.00) from holding Standard Motor Products or give up 4.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. Standard Motor Products
Performance |
| Timeline |
| Commercial Vehicle |
| Standard Motor Products |
Commercial Vehicle and Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Standard
The main advantage of trading using opposite Commercial Vehicle and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| Commercial Vehicle vs. Motorcar Parts of | Commercial Vehicle vs. Monro Muffler Brake | Commercial Vehicle vs. Stoneridge | Commercial Vehicle vs. Superior Industries International |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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