Correlation Between COMMERCIAL VEHICLE and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE and Plastic Omnium 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 Plastic Omnium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and Plastic Omnium, you can compare the effects of market volatilities on COMMERCIAL VEHICLE and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and Plastic Omnium.
Diversification Opportunities for COMMERCIAL VEHICLE and Plastic Omnium
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between COMMERCIAL and Plastic is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Plastic Omnium go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and Plastic Omnium
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Plastic Omnium. In addition to that, COMMERCIAL VEHICLE is 1.33 times more volatile than Plastic Omnium. It trades about -0.05 of its total potential returns per unit of risk. Plastic Omnium is currently generating about -0.02 per unit of volatility. If you would invest 1,285 in Plastic Omnium on September 3, 2024 and sell it today you would lose (422.00) from holding Plastic Omnium or give up 32.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. Plastic Omnium
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| Plastic Omnium |
COMMERCIAL VEHICLE and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and Plastic Omnium
The main advantage of trading using opposite COMMERCIAL VEHICLE and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| COMMERCIAL VEHICLE vs. JD SPORTS FASH | COMMERCIAL VEHICLE vs. ARISTOCRAT LEISURE | COMMERCIAL VEHICLE vs. United Utilities Group | COMMERCIAL VEHICLE vs. Columbia Sportswear |
| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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