Correlation Between AGRICULTBK HADR/25 and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR/25 and SWISS WATER 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 AGRICULTBK HADR/25 and SWISS WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on AGRICULTBK HADR/25 and SWISS WATER 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 AGRICULTBK HADR/25 with a short position of SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR/25 and SWISS WATER.
Diversification Opportunities for AGRICULTBK HADR/25 and SWISS WATER
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGRICULTBK and SWISS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE and AGRICULTBK HADR/25 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 AGRICULTBK HADR25 YC are associated (or correlated) with SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of AGRICULTBK HADR/25 i.e., AGRICULTBK HADR/25 and SWISS WATER go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR/25 and SWISS WATER
Assuming the 90 days trading horizon AGRICULTBK HADR/25 is expected to generate 3.28 times less return on investment than SWISS WATER. But when comparing it to its historical volatility, AGRICULTBK HADR25 YC is 1.49 times less risky than SWISS WATER. It trades about 0.06 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 252.00 in SWISS WATER DECAFFCOFFEE on August 31, 2024 and sell it today you would earn a total of 16.00 from holding SWISS WATER DECAFFCOFFEE or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICULTBK HADR25 YC vs. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| AGRICULTBK HADR/25 |
| SWISS WATER DECAFFCOFFEE |
AGRICULTBK HADR/25 and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICULTBK HADR/25 and SWISS WATER
The main advantage of trading using opposite AGRICULTBK HADR/25 and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR/25 position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| AGRICULTBK HADR/25 vs. Electronic Arts | AGRICULTBK HADR/25 vs. Check Point Software | AGRICULTBK HADR/25 vs. Harmony Gold Mining | AGRICULTBK HADR/25 vs. Nucletron Electronic Aktiengesellschaft |
| SWISS WATER vs. Pure Storage | SWISS WATER vs. DICKER DATA LTD | SWISS WATER vs. DATANG INTL POW | SWISS WATER vs. Public Storage |
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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