Correlation Between Commercial Vehicle and Steel Partners
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and Steel Partners 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 Steel Partners 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 Steel Partners Holdings, you can compare the effects of market volatilities on Commercial Vehicle and Steel Partners 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 Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and Steel Partners.
Diversification Opportunities for Commercial Vehicle and Steel Partners
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and Steel is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Steel Partners go up and down completely randomly.
Pair Corralation between Commercial Vehicle and Steel Partners
Given the investment horizon of 90 days Commercial Vehicle Group is expected to under-perform the Steel Partners. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 1.28 times less risky than Steel Partners. The stock trades about -0.16 of its potential returns per unit of risk. The Steel Partners Holdings is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,256 in Steel Partners Holdings on November 1, 2024 and sell it today you would lose (316.00) from holding Steel Partners Holdings or give up 7.42% 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. Steel Partners Holdings
Performance |
| Timeline |
| Commercial Vehicle |
| Steel Partners Holdings |
Commercial Vehicle and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and Steel Partners
The main advantage of trading using opposite Commercial Vehicle and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.| Commercial Vehicle vs. Motorcar Parts of | Commercial Vehicle vs. Monro Muffler Brake | Commercial Vehicle vs. Stoneridge | Commercial Vehicle vs. Superior Industries International |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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