Correlation Between Consumer Services and Consumer Goods
Can any of the company-specific risk be diversified away by investing in both Consumer Services and Consumer Goods 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 Consumer Services and Consumer Goods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Services Ultrasector and Consumer Goods Ultrasector, you can compare the effects of market volatilities on Consumer Services and Consumer Goods 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 Consumer Services with a short position of Consumer Goods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Services and Consumer Goods.
Diversification Opportunities for Consumer Services and Consumer Goods
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Consumer and Consumer is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Services Ultrasector and Consumer Goods Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Goods Ultra and Consumer Services 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 Consumer Services Ultrasector are associated (or correlated) with Consumer Goods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Goods Ultra has no effect on the direction of Consumer Services i.e., Consumer Services and Consumer Goods go up and down completely randomly.
Pair Corralation between Consumer Services and Consumer Goods
Assuming the 90 days horizon Consumer Services Ultrasector is expected to generate 1.89 times more return on investment than Consumer Goods. However, Consumer Services is 1.89 times more volatile than Consumer Goods Ultrasector. It trades about 0.44 of its potential returns per unit of risk. Consumer Goods Ultrasector is currently generating about 0.25 per unit of risk. If you would invest 6,180 in Consumer Services Ultrasector on September 1, 2024 and sell it today you would earn a total of 1,082 from holding Consumer Services Ultrasector or generate 17.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Consumer Services Ultrasector vs. Consumer Goods Ultrasector
Performance |
| Timeline |
| Consumer Services |
| Consumer Goods Ultra |
Consumer Services and Consumer Goods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Services and Consumer Goods
The main advantage of trading using opposite Consumer Services and Consumer Goods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Services position performs unexpectedly, Consumer Goods 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 Consumer Goods will offset losses from the drop in Consumer Goods' long position.| Consumer Services vs. Gold And Precious | Consumer Services vs. James Balanced Golden | Consumer Services vs. Vy Goldman Sachs | Consumer Services vs. International Investors Gold |
| Consumer Goods vs. Consumer Goods Ultrasector | Consumer Goods vs. Consumer Services Ultrasector | Consumer Goods vs. Ultramid Cap Profund Ultramid Cap | Consumer Goods vs. Internet Ultrasector Profund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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