Correlation Between COMMERCIAL VEHICLE and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE and Dominion Energy 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 COMMERCIAL VEHICLE and Dominion Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and Dominion Energy, you can compare the effects of market volatilities on COMMERCIAL VEHICLE and Dominion Energy 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 COMMERCIAL VEHICLE with a short position of Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and Dominion Energy.
Diversification Opportunities for COMMERCIAL VEHICLE and Dominion Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between COMMERCIAL and Dominion is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE are associated (or correlated) with Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Dominion Energy go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and Dominion Energy
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Dominion Energy. In addition to that, COMMERCIAL VEHICLE is 2.39 times more volatile than Dominion Energy. It trades about -0.1 of its total potential returns per unit of risk. Dominion Energy is currently generating about 0.09 per unit of volatility. If you would invest 4,140 in Dominion Energy on September 2, 2024 and sell it today you would earn a total of 1,421 from holding Dominion Energy or generate 34.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. Dominion Energy
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| Dominion Energy |
COMMERCIAL VEHICLE and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and Dominion Energy
The main advantage of trading using opposite COMMERCIAL VEHICLE and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| COMMERCIAL VEHICLE vs. National Retail Properties | COMMERCIAL VEHICLE vs. Tsingtao Brewery | COMMERCIAL VEHICLE vs. Caseys General Stores | COMMERCIAL VEHICLE vs. AEON STORES |
| Dominion Energy vs. TEXAS ROADHOUSE | Dominion Energy vs. United Airlines Holdings | Dominion Energy vs. SINGAPORE AIRLINES | Dominion Energy vs. BJs Restaurants |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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