Correlation Between American Premium and Gencor Industries
Can any of the company-specific risk be diversified away by investing in both American Premium and Gencor Industries 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 Gencor Industries 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 Gencor Industries, you can compare the effects of market volatilities on American Premium and Gencor Industries 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 Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Premium and Gencor Industries.
Diversification Opportunities for American Premium and Gencor Industries
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and Gencor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding American Premium Water and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries 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 Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of American Premium i.e., American Premium and Gencor Industries go up and down completely randomly.
Pair Corralation between American Premium and Gencor Industries
Given the investment horizon of 90 days American Premium Water is expected to generate 90.87 times more return on investment than Gencor Industries. However, American Premium is 90.87 times more volatile than Gencor Industries. It trades about 0.21 of its potential returns per unit of risk. Gencor Industries is currently generating about 0.07 per unit of risk. If you would invest 0.00 in American Premium Water on August 29, 2024 and sell it today you would earn a total of 0.00 from holding American Premium Water or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.34% |
| Values | Daily Returns |
American Premium Water vs. Gencor Industries
Performance |
| Timeline |
| American Premium Water |
| Gencor Industries |
American Premium and Gencor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Premium and Gencor Industries
The main advantage of trading using opposite American Premium and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Premium position performs unexpectedly, Gencor Industries 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.| American Premium vs. SPENN Technology AS | American Premium vs. OFX Group Ltd | American Premium vs. Blockmate Ventures | American Premium vs. APAC Resources Limited |
| Gencor Industries vs. Alamo Group | Gencor Industries vs. Columbus McKinnon | Gencor Industries vs. Rev Group | Gencor Industries vs. Lindsay |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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