Correlation Between Genuine Parts and Coupang LLC
Can any of the company-specific risk be diversified away by investing in both Genuine Parts and Coupang LLC 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 Genuine Parts and Coupang LLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and Coupang LLC, you can compare the effects of market volatilities on Genuine Parts and Coupang LLC 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 Genuine Parts with a short position of Coupang LLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Coupang LLC.
Diversification Opportunities for Genuine Parts and Coupang LLC
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genuine and Coupang is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Coupang LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coupang LLC and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Coupang LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coupang LLC has no effect on the direction of Genuine Parts i.e., Genuine Parts and Coupang LLC go up and down completely randomly.
Pair Corralation between Genuine Parts and Coupang LLC
Considering the 90-day investment horizon Genuine Parts is expected to generate 2.6 times less return on investment than Coupang LLC. But when comparing it to its historical volatility, Genuine Parts Co is 1.15 times less risky than Coupang LLC. It trades about 0.19 of its potential returns per unit of risk. Coupang LLC is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 2,206 in Coupang LLC on November 18, 2024 and sell it today you would earn a total of 328.00 from holding Coupang LLC or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genuine Parts Co vs. Coupang LLC
Performance |
| Timeline |
| Genuine Parts |
| Coupang LLC |
Genuine Parts and Coupang LLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Coupang LLC
The main advantage of trading using opposite Genuine Parts and Coupang LLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts position performs unexpectedly, Coupang LLC 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 Coupang LLC will offset losses from the drop in Coupang LLC's long position.| Genuine Parts vs. Dover | Genuine Parts vs. Cincinnati Financial | Genuine Parts vs. Leggett Platt Incorporated | Genuine Parts vs. WW Grainger |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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