Correlation Between AMCON Distributing and Stepan
Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and Stepan 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 Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMCON Distributing and Stepan Company, you can compare the effects of market volatilities on AMCON Distributing and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Stepan.
Diversification Opportunities for AMCON Distributing and Stepan
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AMCON and Stepan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Stepan go up and down completely randomly.
Pair Corralation between AMCON Distributing and Stepan
Considering the 90-day investment horizon AMCON Distributing is expected to generate 2.04 times more return on investment than Stepan. However, AMCON Distributing is 2.04 times more volatile than Stepan Company. It trades about -0.02 of its potential returns per unit of risk. Stepan Company is currently generating about -0.08 per unit of risk. If you would invest 14,145 in AMCON Distributing on November 2, 2024 and sell it today you would lose (1,745) from holding AMCON Distributing or give up 12.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.06% |
| Values | Daily Returns |
AMCON Distributing vs. Stepan Company
Performance |
| Timeline |
| AMCON Distributing |
| Stepan Company |
AMCON Distributing and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMCON Distributing and Stepan
The main advantage of trading using opposite AMCON Distributing and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| AMCON Distributing vs. The Chefs Warehouse | AMCON Distributing vs. G Willi Food International | AMCON Distributing vs. SpartanNash Co | AMCON Distributing vs. Calavo Growers |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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