Correlation Between Plastic Omnium and BUILDERS FIRSTSOURC
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium and BUILDERS FIRSTSOURC 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 Plastic Omnium and BUILDERS FIRSTSOURC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and BUILDERS FIRSTSOURC, you can compare the effects of market volatilities on Plastic Omnium and BUILDERS FIRSTSOURC 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 Plastic Omnium with a short position of BUILDERS FIRSTSOURC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and BUILDERS FIRSTSOURC.
Diversification Opportunities for Plastic Omnium and BUILDERS FIRSTSOURC
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Plastic and BUILDERS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and BUILDERS FIRSTSOURC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BUILDERS FIRSTSOURC and Plastic Omnium 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 Plastic Omnium are associated (or correlated) with BUILDERS FIRSTSOURC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BUILDERS FIRSTSOURC has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and BUILDERS FIRSTSOURC go up and down completely randomly.
Pair Corralation between Plastic Omnium and BUILDERS FIRSTSOURC
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the BUILDERS FIRSTSOURC. In addition to that, Plastic Omnium is 1.02 times more volatile than BUILDERS FIRSTSOURC. It trades about -0.05 of its total potential returns per unit of risk. BUILDERS FIRSTSOURC is currently generating about 0.09 per unit of volatility. If you would invest 13,405 in BUILDERS FIRSTSOURC on September 3, 2024 and sell it today you would earn a total of 3,975 from holding BUILDERS FIRSTSOURC or generate 29.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plastic Omnium vs. BUILDERS FIRSTSOURC
Performance |
| Timeline |
| Plastic Omnium |
| BUILDERS FIRSTSOURC |
Plastic Omnium and BUILDERS FIRSTSOURC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and BUILDERS FIRSTSOURC
The main advantage of trading using opposite Plastic Omnium and BUILDERS FIRSTSOURC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium position performs unexpectedly, BUILDERS FIRSTSOURC 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 BUILDERS FIRSTSOURC will offset losses from the drop in BUILDERS FIRSTSOURC's long position.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| BUILDERS FIRSTSOURC vs. Vulcan Materials | BUILDERS FIRSTSOURC vs. GEELY AUTOMOBILE | BUILDERS FIRSTSOURC vs. COMMERCIAL VEHICLE | BUILDERS FIRSTSOURC vs. Plastic Omnium |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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