Correlation Between American Premium and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both American Premium and Daimler Truck 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 Daimler Truck 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 Daimler Truck Holding, you can compare the effects of market volatilities on American Premium and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Premium and Daimler Truck.
Diversification Opportunities for American Premium and Daimler Truck
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Daimler is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Premium Water and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of American Premium i.e., American Premium and Daimler Truck go up and down completely randomly.
Pair Corralation between American Premium and Daimler Truck
Given the investment horizon of 90 days American Premium Water is expected to generate 81.43 times more return on investment than Daimler Truck. However, American Premium is 81.43 times more volatile than Daimler Truck Holding. It trades about 0.16 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.03 per unit of risk. If you would invest 0.07 in American Premium Water on September 2, 2024 and sell it today you would lose (0.06) from holding American Premium Water or give up 85.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.31% |
| Values | Daily Returns |
American Premium Water vs. Daimler Truck Holding
Performance |
| Timeline |
| American Premium Water |
| Daimler Truck Holding |
American Premium and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Premium and Daimler Truck
The main advantage of trading using opposite American Premium and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Premium position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| American Premium vs. First Tractor | American Premium vs. Ag Growth International | American Premium vs. AmeraMex International | American Premium vs. Arts Way Manufacturing Co |
| Daimler Truck vs. American Premium Water | Daimler Truck vs. Arts Way Manufacturing Co | Daimler Truck vs. Astec Industries | Daimler Truck vs. Alamo Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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