Correlation Between Holley and Dana
Can any of the company-specific risk be diversified away by investing in both Holley and Dana 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 Holley and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holley Inc and Dana Inc, you can compare the effects of market volatilities on Holley and Dana 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 Holley with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holley and Dana.
Diversification Opportunities for Holley and Dana
Significant diversification
The 3 months correlation between Holley and Dana is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Holley Inc and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Holley 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 Holley Inc are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Holley i.e., Holley and Dana go up and down completely randomly.
Pair Corralation between Holley and Dana
Given the investment horizon of 90 days Holley Inc is expected to under-perform the Dana. In addition to that, Holley is 1.53 times more volatile than Dana Inc. It trades about -0.09 of its total potential returns per unit of risk. Dana Inc is currently generating about -0.08 per unit of volatility. If you would invest 1,615 in Dana Inc on November 29, 2024 and sell it today you would lose (57.00) from holding Dana Inc or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holley Inc vs. Dana Inc
Performance |
| Timeline |
| Holley Inc |
| Dana Inc |
Holley and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holley and Dana
The main advantage of trading using opposite Holley and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holley position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.| Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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