Correlation Between Dana Large and Spirit Of
Can any of the company-specific risk be diversified away by investing in both Dana Large and Spirit Of 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 Dana Large and Spirit Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Spirit Of America, you can compare the effects of market volatilities on Dana Large and Spirit Of 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 Dana Large with a short position of Spirit Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Spirit Of.
Diversification Opportunities for Dana Large and Spirit Of
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dana and Spirit is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Spirit Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Of America and Dana Large 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 Dana Large Cap are associated (or correlated) with Spirit Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Of America has no effect on the direction of Dana Large i.e., Dana Large and Spirit Of go up and down completely randomly.
Pair Corralation between Dana Large and Spirit Of
Assuming the 90 days horizon Dana Large Cap is expected to generate 0.7 times more return on investment than Spirit Of. However, Dana Large Cap is 1.42 times less risky than Spirit Of. It trades about 0.03 of its potential returns per unit of risk. Spirit Of America is currently generating about -0.04 per unit of risk. If you would invest 2,695 in Dana Large Cap on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Dana Large Cap or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Large Cap vs. Spirit Of America
Performance |
| Timeline |
| Dana Large Cap |
| Spirit Of America |
Dana Large and Spirit Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Large and Spirit Of
The main advantage of trading using opposite Dana Large and Spirit Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, Spirit Of 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 Spirit Of will offset losses from the drop in Spirit Of's long position.| Dana Large vs. Chestnut Street Exchange | Dana Large vs. Putnam Money Market | Dana Large vs. Blackrock Exchange Portfolio | Dana Large vs. Matson Money Equity |
| Spirit Of vs. Guggenheim Risk Managed | Spirit Of vs. Short Real Estate | Spirit Of vs. Pender Real Estate | Spirit Of vs. Prudential Real Estate |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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