Correlation Between Dorman Products and Strattec Security
Can any of the company-specific risk be diversified away by investing in both Dorman Products and Strattec Security 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 Dorman Products and Strattec Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorman Products and Strattec Security, you can compare the effects of market volatilities on Dorman Products and Strattec Security 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 Dorman Products with a short position of Strattec Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorman Products and Strattec Security.
Diversification Opportunities for Dorman Products and Strattec Security
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dorman and Strattec is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dorman Products and Strattec Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattec Security and Dorman Products 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 Dorman Products are associated (or correlated) with Strattec Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattec Security has no effect on the direction of Dorman Products i.e., Dorman Products and Strattec Security go up and down completely randomly.
Pair Corralation between Dorman Products and Strattec Security
Given the investment horizon of 90 days Dorman Products is expected to generate 0.69 times more return on investment than Strattec Security. However, Dorman Products is 1.45 times less risky than Strattec Security. It trades about 0.11 of its potential returns per unit of risk. Strattec Security is currently generating about -0.07 per unit of risk. If you would invest 12,576 in Dorman Products on November 9, 2024 and sell it today you would earn a total of 369.00 from holding Dorman Products or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorman Products vs. Strattec Security
Performance |
| Timeline |
| Dorman Products |
| Strattec Security |
Dorman Products and Strattec Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorman Products and Strattec Security
The main advantage of trading using opposite Dorman Products and Strattec Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorman Products position performs unexpectedly, Strattec Security 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 Strattec Security will offset losses from the drop in Strattec Security's long position.| Dorman Products vs. Standard Motor Products | Dorman Products vs. Motorcar Parts of | Dorman Products vs. Douglas Dynamics | Dorman Products vs. Stoneridge |
| Strattec Security vs. Dorman Products | Strattec Security vs. Douglas Dynamics | Strattec Security vs. Monro Muffler Brake | Strattec Security vs. Motorcar Parts of |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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