Correlation Between HE Equipment and Bannix Acquisition
Can any of the company-specific risk be diversified away by investing in both HE Equipment and Bannix Acquisition 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 HE Equipment and Bannix Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Bannix Acquisition Corp, you can compare the effects of market volatilities on HE Equipment and Bannix Acquisition 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 HE Equipment with a short position of Bannix Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Bannix Acquisition.
Diversification Opportunities for HE Equipment and Bannix Acquisition
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between HEES and Bannix is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Bannix Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannix Acquisition Corp and HE Equipment 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 HE Equipment Services are associated (or correlated) with Bannix Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannix Acquisition Corp has no effect on the direction of HE Equipment i.e., HE Equipment and Bannix Acquisition go up and down completely randomly.
Pair Corralation between HE Equipment and Bannix Acquisition
Given the investment horizon of 90 days HE Equipment is expected to generate 167.92 times less return on investment than Bannix Acquisition. But when comparing it to its historical volatility, HE Equipment Services is 48.1 times less risky than Bannix Acquisition. It trades about 0.04 of its potential returns per unit of risk. Bannix Acquisition Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Bannix Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 0.78 from holding Bannix Acquisition Corp or generate 39.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 51.72% |
| Values | Daily Returns |
HE Equipment Services vs. Bannix Acquisition Corp
Performance |
| Timeline |
| HE Equipment Services |
| Bannix Acquisition Corp |
HE Equipment and Bannix Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Bannix Acquisition
The main advantage of trading using opposite HE Equipment and Bannix Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Bannix Acquisition 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 Bannix Acquisition will offset losses from the drop in Bannix Acquisition's long position.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| Bannix Acquisition vs. Broadstone Net Lease | Bannix Acquisition vs. NETGEAR | Bannix Acquisition vs. Alta Equipment Group | Bannix Acquisition vs. HE Equipment Services |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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