Correlation Between Alphabet and Celestica
Can any of the company-specific risk be diversified away by investing in both Alphabet and Celestica 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 Alphabet and Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Celestica, you can compare the effects of market volatilities on Alphabet and Celestica 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 Alphabet with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Celestica.
Diversification Opportunities for Alphabet and Celestica
Very poor diversification
The 3 months correlation between Alphabet and Celestica is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Alphabet i.e., Alphabet and Celestica go up and down completely randomly.
Pair Corralation between Alphabet and Celestica
Given the investment horizon of 90 days Alphabet is expected to generate 23.99 times less return on investment than Celestica. But when comparing it to its historical volatility, Alphabet Inc Class C is 2.43 times less risky than Celestica. It trades about 0.04 of its potential returns per unit of risk. Celestica is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 6,841 in Celestica on August 26, 2024 and sell it today you would earn a total of 5,613 from holding Celestica or generate 82.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Celestica
Performance |
| Timeline |
| Alphabet Class C |
| Celestica |
Alphabet and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Celestica
The main advantage of trading using opposite Alphabet and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.The idea behind Alphabet Inc Class C and Celestica 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.| Celestica vs. Descartes Systems Group | Celestica vs. CAE Inc | Celestica vs. CGI Inc | Celestica vs. Cogeco Communications |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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