Correlation Between Gencor Industries and National Storm
Can any of the company-specific risk be diversified away by investing in both Gencor Industries and National Storm 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 Gencor Industries and National Storm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gencor Industries and National Storm Recovery, you can compare the effects of market volatilities on Gencor Industries and National Storm 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 Gencor Industries with a short position of National Storm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gencor Industries and National Storm.
Diversification Opportunities for Gencor Industries and National Storm
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gencor and National is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gencor Industries and National Storm Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storm Recovery and Gencor Industries 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 Gencor Industries are associated (or correlated) with National Storm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storm Recovery has no effect on the direction of Gencor Industries i.e., Gencor Industries and National Storm go up and down completely randomly.
Pair Corralation between Gencor Industries and National Storm
Given the investment horizon of 90 days Gencor Industries is expected to generate 0.29 times more return on investment than National Storm. However, Gencor Industries is 3.48 times less risky than National Storm. It trades about 0.15 of its potential returns per unit of risk. National Storm Recovery is currently generating about -0.34 per unit of risk. If you would invest 2,015 in Gencor Industries on August 29, 2024 and sell it today you would earn a total of 155.00 from holding Gencor Industries or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gencor Industries vs. National Storm Recovery
Performance |
| Timeline |
| Gencor Industries |
| National Storm Recovery |
Gencor Industries and National Storm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gencor Industries and National Storm
The main advantage of trading using opposite Gencor Industries and National Storm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gencor Industries position performs unexpectedly, National Storm 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 National Storm will offset losses from the drop in National Storm's long position.| Gencor Industries vs. Nikola Corp | Gencor Industries vs. Wabash National | Gencor Industries vs. American Premium Water | Gencor Industries vs. Titan International |
| National Storm vs. Interfor | National Storm vs. Western Forest Products | National Storm vs. Stella Jones | National Storm vs. Simpson Manufacturing |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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