Correlation Between AP Mller and Kohls
Can any of the company-specific risk be diversified away by investing in both AP Mller and Kohls 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 AP Mller and Kohls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Kohls, you can compare the effects of market volatilities on AP Mller and Kohls 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 AP Mller with a short position of Kohls. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Kohls.
Diversification Opportunities for AP Mller and Kohls
Excellent diversification
The 3 months correlation between DP4B and Kohls is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Kohls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohls and AP Mller 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 AP Mller are associated (or correlated) with Kohls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohls has no effect on the direction of AP Mller i.e., AP Mller and Kohls go up and down completely randomly.
Pair Corralation between AP Mller and Kohls
Assuming the 90 days trading horizon AP Mller is expected to generate 0.48 times more return on investment than Kohls. However, AP Mller is 2.1 times less risky than Kohls. It trades about 0.1 of its potential returns per unit of risk. Kohls is currently generating about -0.12 per unit of risk. If you would invest 153,000 in AP Mller on September 2, 2024 and sell it today you would earn a total of 7,500 from holding AP Mller or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AP Mller vs. Kohls
Performance |
| Timeline |
| AP Mller |
| Kohls |
AP Mller and Kohls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Mller and Kohls
The main advantage of trading using opposite AP Mller and Kohls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Kohls 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 Kohls will offset losses from the drop in Kohls' long position.| AP Mller vs. Clarkson PLC | AP Mller vs. Wilh Wilhelmsen Holding | AP Mller vs. Superior Plus Corp | AP Mller vs. NMI Holdings |
| Kohls vs. Taylor Morrison Home | Kohls vs. Hyrican Informationssysteme Aktiengesellschaft | Kohls vs. Haier Smart Home | Kohls vs. American Homes 4 |
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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