Correlation Between Hitachi Construction and SPARTAN STORES
Can any of the company-specific risk be diversified away by investing in both Hitachi Construction and SPARTAN STORES 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 Hitachi Construction and SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hitachi Construction Machinery and SPARTAN STORES, you can compare the effects of market volatilities on Hitachi Construction and SPARTAN STORES 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 Hitachi Construction with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hitachi Construction and SPARTAN STORES.
Diversification Opportunities for Hitachi Construction and SPARTAN STORES
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hitachi and SPARTAN is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hitachi Construction Machinery and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and Hitachi Construction 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 Hitachi Construction Machinery are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Hitachi Construction i.e., Hitachi Construction and SPARTAN STORES go up and down completely randomly.
Pair Corralation between Hitachi Construction and SPARTAN STORES
Assuming the 90 days horizon Hitachi Construction Machinery is expected to generate 0.78 times more return on investment than SPARTAN STORES. However, Hitachi Construction Machinery is 1.28 times less risky than SPARTAN STORES. It trades about 0.0 of its potential returns per unit of risk. SPARTAN STORES is currently generating about -0.05 per unit of risk. If you would invest 2,140 in Hitachi Construction Machinery on October 12, 2024 and sell it today you would lose (20.00) from holding Hitachi Construction Machinery or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Hitachi Construction Machinery vs. SPARTAN STORES
Performance |
| Timeline |
| Hitachi Construction |
| SPARTAN STORES |
Hitachi Construction and SPARTAN STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hitachi Construction and SPARTAN STORES
The main advantage of trading using opposite Hitachi Construction and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hitachi Construction position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.| Hitachi Construction vs. New Residential Investment | Hitachi Construction vs. PennantPark Investment | Hitachi Construction vs. SEI INVESTMENTS | Hitachi Construction vs. CN MODERN DAIRY |
| SPARTAN STORES vs. Columbia Sportswear | SPARTAN STORES vs. WIMFARM SA EO | SPARTAN STORES vs. JD SPORTS FASH | SPARTAN STORES vs. Hitachi Construction Machinery |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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