Correlation Between Graham and Middleby Corp
Can any of the company-specific risk be diversified away by investing in both Graham and Middleby Corp 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 Graham and Middleby Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham and Middleby Corp, you can compare the effects of market volatilities on Graham and Middleby Corp 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 Graham with a short position of Middleby Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham and Middleby Corp.
Diversification Opportunities for Graham and Middleby Corp
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Graham and Middleby is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Graham and Middleby Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Middleby Corp and Graham 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 Graham are associated (or correlated) with Middleby Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Middleby Corp has no effect on the direction of Graham i.e., Graham and Middleby Corp go up and down completely randomly.
Pair Corralation between Graham and Middleby Corp
Considering the 90-day investment horizon Graham is expected to generate 1.79 times more return on investment than Middleby Corp. However, Graham is 1.79 times more volatile than Middleby Corp. It trades about 0.44 of its potential returns per unit of risk. Middleby Corp is currently generating about 0.06 per unit of risk. If you would invest 2,878 in Graham on August 30, 2024 and sell it today you would earn a total of 1,523 from holding Graham or generate 52.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graham vs. Middleby Corp
Performance |
| Timeline |
| Graham |
| Middleby Corp |
Graham and Middleby Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham and Middleby Corp
The main advantage of trading using opposite Graham and Middleby Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham position performs unexpectedly, Middleby Corp 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 Middleby Corp will offset losses from the drop in Middleby Corp's long position.| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
| Middleby Corp vs. Enpro Industries | Middleby Corp vs. Kadant Inc | Middleby Corp vs. ITT Inc | Middleby Corp vs. Franklin Electric Co |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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