Correlation Between American Premium and AmeraMex International
Can any of the company-specific risk be diversified away by investing in both American Premium and AmeraMex International 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 American Premium and AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Premium Water and AmeraMex International, you can compare the effects of market volatilities on American Premium and AmeraMex International 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 American Premium with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Premium and AmeraMex International.
Diversification Opportunities for American Premium and AmeraMex International
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and AmeraMex is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding American Premium Water and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and American Premium 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 American Premium Water are associated (or correlated) with AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of American Premium i.e., American Premium and AmeraMex International go up and down completely randomly.
Pair Corralation between American Premium and AmeraMex International
Given the investment horizon of 90 days American Premium Water is expected to generate 16.95 times more return on investment than AmeraMex International. However, American Premium is 16.95 times more volatile than AmeraMex International. It trades about 0.19 of its potential returns per unit of risk. AmeraMex International is currently generating about 0.08 per unit of risk. If you would invest 0.00 in American Premium Water on August 26, 2024 and sell it today you would earn a total of 0.01 from holding American Premium Water or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.07% |
| Values | Daily Returns |
American Premium Water vs. AmeraMex International
Performance |
| Timeline |
| American Premium Water |
| AmeraMex International |
American Premium and AmeraMex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Premium and AmeraMex International
The main advantage of trading using opposite American Premium and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Premium position performs unexpectedly, AmeraMex International 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 AmeraMex International will offset losses from the drop in AmeraMex International's long position.| American Premium vs. Morgan Stanley | American Premium vs. Goldman Sachs Group | American Premium vs. Charles Schwab Corp | American Premium vs. Interactive Brokers Group |
| AmeraMex International vs. Lion Electric Corp | AmeraMex International vs. Nikola Corp | AmeraMex International vs. Buhler Industries | AmeraMex International vs. Toyota Industries |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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