Correlation Between GEELY AUTOMOBILE and WW Grainger
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE and WW Grainger 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 GEELY AUTOMOBILE and WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and WW Grainger, you can compare the effects of market volatilities on GEELY AUTOMOBILE and WW Grainger 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 GEELY AUTOMOBILE with a short position of WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and WW Grainger.
Diversification Opportunities for GEELY AUTOMOBILE and WW Grainger
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GEELY and GWW is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE are associated (or correlated) with WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and WW Grainger go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and WW Grainger
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.63 times more return on investment than WW Grainger. However, GEELY AUTOMOBILE is 1.63 times more volatile than WW Grainger. It trades about 0.06 of its potential returns per unit of risk. WW Grainger is currently generating about 0.09 per unit of risk. If you would invest 92.00 in GEELY AUTOMOBILE on October 9, 2024 and sell it today you would earn a total of 85.00 from holding GEELY AUTOMOBILE or generate 92.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. WW Grainger
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| WW Grainger |
GEELY AUTOMOBILE and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and WW Grainger
The main advantage of trading using opposite GEELY AUTOMOBILE and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc | GEELY AUTOMOBILE vs. Apple Inc |
| WW Grainger vs. Broadcom | WW Grainger vs. Broadwind | WW Grainger vs. Teradata Corp | WW Grainger vs. GEAR4MUSIC LS 10 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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