Correlation Between Herald Investment and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Hollywood Bowl 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 Herald Investment and Hollywood Bowl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Hollywood Bowl Group, you can compare the effects of market volatilities on Herald Investment and Hollywood Bowl 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 Herald Investment with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Hollywood Bowl.
Diversification Opportunities for Herald Investment and Hollywood Bowl
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Herald and Hollywood is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Herald Investment i.e., Herald Investment and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Herald Investment and Hollywood Bowl
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.7 times more return on investment than Hollywood Bowl. However, Herald Investment Trust is 1.43 times less risky than Hollywood Bowl. It trades about 0.78 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.18 per unit of risk. If you would invest 216,000 in Herald Investment Trust on September 18, 2024 and sell it today you would earn a total of 33,000 from holding Herald Investment Trust or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Herald Investment Trust vs. Hollywood Bowl Group
Performance |
| Timeline |
| Herald Investment Trust |
| Hollywood Bowl Group |
Herald Investment and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Hollywood Bowl
The main advantage of trading using opposite Herald Investment and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| Herald Investment vs. Catalyst Media Group | Herald Investment vs. CATLIN GROUP | Herald Investment vs. Tamburi Investment Partners | Herald Investment vs. Magnora ASA |
| Hollywood Bowl vs. Arrow Electronics | Hollywood Bowl vs. Smithson Investment Trust | Hollywood Bowl vs. Bankers Investment Trust | Hollywood Bowl vs. Herald Investment Trust |
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 Stocks Directory module to find actively traded stocks across global markets.
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