Correlation Between Davis Commodities and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Davis Commodities and AMCON Distributing 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 Davis Commodities and AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Davis Commodities Limited and AMCON Distributing, you can compare the effects of market volatilities on Davis Commodities and AMCON Distributing 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 Davis Commodities with a short position of AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Commodities and AMCON Distributing.
Diversification Opportunities for Davis Commodities and AMCON Distributing
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Davis and AMCON is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Davis Commodities Limited and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Davis Commodities 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 Davis Commodities Limited are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Davis Commodities i.e., Davis Commodities and AMCON Distributing go up and down completely randomly.
Pair Corralation between Davis Commodities and AMCON Distributing
Given the investment horizon of 90 days Davis Commodities Limited is expected to generate 1.82 times more return on investment than AMCON Distributing. However, Davis Commodities is 1.82 times more volatile than AMCON Distributing. It trades about 0.01 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.03 per unit of risk. If you would invest 120.00 in Davis Commodities Limited on August 27, 2024 and sell it today you would lose (27.00) from holding Davis Commodities Limited or give up 22.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
Davis Commodities Limited vs. AMCON Distributing
Performance |
| Timeline |
| Davis Commodities |
| AMCON Distributing |
Davis Commodities and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Davis Commodities and AMCON Distributing
The main advantage of trading using opposite Davis Commodities and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davis Commodities position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Davis Commodities vs. Hf Foods Group | Davis Commodities vs. Innovative Food Hldg | Davis Commodities vs. Calavo Growers | Davis Commodities vs. The Chefs Warehouse |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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