Correlation Between Comfort Systems and Southland Holdings
Can any of the company-specific risk be diversified away by investing in both Comfort Systems and Southland Holdings 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 Comfort Systems and Southland Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comfort Systems USA and Southland Holdings, you can compare the effects of market volatilities on Comfort Systems and Southland Holdings 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 Comfort Systems with a short position of Southland Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comfort Systems and Southland Holdings.
Diversification Opportunities for Comfort Systems and Southland Holdings
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Comfort and Southland is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA and Southland Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southland Holdings and Comfort Systems 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 Comfort Systems USA are associated (or correlated) with Southland Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southland Holdings has no effect on the direction of Comfort Systems i.e., Comfort Systems and Southland Holdings go up and down completely randomly.
Pair Corralation between Comfort Systems and Southland Holdings
Considering the 90-day investment horizon Comfort Systems USA is expected to generate 0.65 times more return on investment than Southland Holdings. However, Comfort Systems USA is 1.54 times less risky than Southland Holdings. It trades about 0.11 of its potential returns per unit of risk. Southland Holdings is currently generating about -0.06 per unit of risk. If you would invest 33,824 in Comfort Systems USA on August 24, 2024 and sell it today you would earn a total of 15,173 from holding Comfort Systems USA or generate 44.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comfort Systems USA vs. Southland Holdings
Performance |
| Timeline |
| Comfort Systems USA |
| Southland Holdings |
Comfort Systems and Southland Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comfort Systems and Southland Holdings
The main advantage of trading using opposite Comfort Systems and Southland Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comfort Systems position performs unexpectedly, Southland Holdings 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 Southland Holdings will offset losses from the drop in Southland Holdings' long position.| Comfort Systems vs. MYR Group | Comfort Systems vs. Granite Construction Incorporated | Comfort Systems vs. Dycom Industries | Comfort Systems vs. MasTec Inc |
| Southland Holdings vs. Emerson Radio | Southland Holdings vs. Flex | Southland Holdings vs. Aerofoam Metals | Southland Holdings vs. Sabre Corpo |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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