Correlation Between First and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both First and Hollywood Bowl 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 First and Hollywood Bowl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Hollywood Bowl Group, you can compare the effects of market volatilities on First and Hollywood Bowl 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 First with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Hollywood Bowl.
Diversification Opportunities for First and Hollywood Bowl
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Hollywood is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group and First 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 First Class Metals are associated (or correlated) with Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of First i.e., First and Hollywood Bowl go up and down completely randomly.
Pair Corralation between First and Hollywood Bowl
Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Hollywood Bowl. In addition to that, First is 2.56 times more volatile than Hollywood Bowl Group. It trades about -0.07 of its total potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.02 per unit of volatility. If you would invest 25,758 in Hollywood Bowl Group on October 14, 2024 and sell it today you would earn a total of 1,942 from holding Hollywood Bowl Group or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
First Class Metals vs. Hollywood Bowl Group
Performance |
| Timeline |
| First Class Metals |
| Hollywood Bowl Group |
First and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Hollywood Bowl
The main advantage of trading using opposite First and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| First vs. Spirent Communications plc | First vs. Pets at Home | First vs. Cairn Homes PLC | First vs. Ecclesiastical Insurance Office |
| Hollywood Bowl vs. Cornish Metals | Hollywood Bowl vs. Lundin Mining Corp | Hollywood Bowl vs. Livermore Investments Group | Hollywood Bowl vs. First Class Metals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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