Correlation Between Graco and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Graco and Atlas Copco 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 Graco and Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Atlas Copco AB, you can compare the effects of market volatilities on Graco and Atlas Copco 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 Graco with a short position of Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Atlas Copco.
Diversification Opportunities for Graco and Atlas Copco
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Graco and Atlas is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB and Graco 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 Graco Inc are associated (or correlated) with Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Graco i.e., Graco and Atlas Copco go up and down completely randomly.
Pair Corralation between Graco and Atlas Copco
Considering the 90-day investment horizon Graco Inc is expected to generate 0.78 times more return on investment than Atlas Copco. However, Graco Inc is 1.28 times less risky than Atlas Copco. It trades about 0.05 of its potential returns per unit of risk. Atlas Copco AB is currently generating about 0.04 per unit of risk. If you would invest 6,672 in Graco Inc on August 29, 2024 and sell it today you would earn a total of 2,384 from holding Graco Inc or generate 35.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Atlas Copco AB
Performance |
| Timeline |
| Graco Inc |
| Atlas Copco AB |
Graco and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Atlas Copco
The main advantage of trading using opposite Graco and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.The idea behind Graco Inc and Atlas Copco AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Atlas Copco vs. Parker Hannifin | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Dover | Atlas Copco vs. Illinois Tool Works |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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