Correlation Between Commercial Vehicle and American States
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle and American States 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 American States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and American States Water, you can compare the effects of market volatilities on Commercial Vehicle and American States 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 American States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and American States.
Diversification Opportunities for Commercial Vehicle and American States
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and American is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 Group are associated (or correlated) with American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and American States go up and down completely randomly.
Pair Corralation between Commercial Vehicle and American States
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to generate 3.0 times more return on investment than American States. However, Commercial Vehicle is 3.0 times more volatile than American States Water. It trades about 0.03 of its potential returns per unit of risk. American States Water is currently generating about -0.21 per unit of risk. If you would invest 222.00 in Commercial Vehicle Group on October 9, 2024 and sell it today you would earn a total of 2.00 from holding Commercial Vehicle Group or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. American States Water
Performance |
| Timeline |
| Commercial Vehicle |
| American States Water |
Commercial Vehicle and American States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and American States
The main advantage of trading using opposite Commercial Vehicle and American States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle position performs unexpectedly, American States 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 American States will offset losses from the drop in American States' long position.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
| American States vs. GOODYEAR T RUBBER | American States vs. Seven West Media | American States vs. PROSIEBENSAT1 MEDIADR4 | American States vs. Compagnie 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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