Correlation Between AMCON Distributing and Davis Commodities
Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and Davis Commodities 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 AMCON Distributing and Davis Commodities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMCON Distributing and Davis Commodities Limited, you can compare the effects of market volatilities on AMCON Distributing and Davis Commodities 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 AMCON Distributing with a short position of Davis Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Davis Commodities.
Diversification Opportunities for AMCON Distributing and Davis Commodities
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMCON and Davis is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Davis Commodities go up and down completely randomly.
Pair Corralation between AMCON Distributing and Davis Commodities
Considering the 90-day investment horizon AMCON Distributing is expected to generate 1.98 times more return on investment than Davis Commodities. However, AMCON Distributing is 1.98 times more volatile than Davis Commodities Limited. It trades about -0.04 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about -0.27 per unit of risk. If you would invest 13,481 in AMCON Distributing on August 27, 2024 and sell it today you would lose (968.00) from holding AMCON Distributing or give up 7.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMCON Distributing vs. Davis Commodities Limited
Performance |
| Timeline |
| AMCON Distributing |
| Davis Commodities |
AMCON Distributing and Davis Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMCON Distributing and Davis Commodities
The main advantage of trading using opposite AMCON Distributing and Davis Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, Davis Commodities 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 Davis Commodities will offset losses from the drop in Davis Commodities' long position.| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Rocky Brands |
| Davis Commodities vs. Innovative Food Hldg | Davis Commodities vs. Calavo Growers | Davis Commodities vs. The Chefs Warehouse | Davis Commodities vs. AMCON Distributing |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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