Correlation Between GLATFELTER and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both GLATFELTER and Dairy Farm 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 GLATFELTER and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLATFELTER and Dairy Farm International, you can compare the effects of market volatilities on GLATFELTER and Dairy Farm 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 GLATFELTER with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLATFELTER and Dairy Farm.
Diversification Opportunities for GLATFELTER and Dairy Farm
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GLATFELTER and Dairy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GLATFELTER and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and GLATFELTER 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 GLATFELTER are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of GLATFELTER i.e., GLATFELTER and Dairy Farm go up and down completely randomly.
Pair Corralation between GLATFELTER and Dairy Farm
Assuming the 90 days trading horizon GLATFELTER is expected to generate 1.31 times more return on investment than Dairy Farm. However, GLATFELTER is 1.31 times more volatile than Dairy Farm International. It trades about 0.07 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.05 per unit of risk. If you would invest 1,734 in GLATFELTER on September 19, 2024 and sell it today you would earn a total of 58.00 from holding GLATFELTER or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLATFELTER vs. Dairy Farm International
Performance |
| Timeline |
| GLATFELTER |
| Dairy Farm International |
GLATFELTER and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLATFELTER and Dairy Farm
The main advantage of trading using opposite GLATFELTER and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLATFELTER position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| GLATFELTER vs. Dairy Farm International | GLATFELTER vs. North American Construction | GLATFELTER vs. Chongqing Machinery Electric | GLATFELTER vs. ALEFARM BREWING DK 05 |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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