Correlation Between Investment and Beowulf Mining
Can any of the company-specific risk be diversified away by investing in both Investment and Beowulf Mining 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 Investment and Beowulf Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Investment and Beowulf Mining, you can compare the effects of market volatilities on Investment and Beowulf Mining 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 Investment with a short position of Beowulf Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Beowulf Mining.
Diversification Opportunities for Investment and Beowulf Mining
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investment and Beowulf is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and Beowulf Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining and 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 The Investment are associated (or correlated) with Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining has no effect on the direction of Investment i.e., Investment and Beowulf Mining go up and down completely randomly.
Pair Corralation between Investment and Beowulf Mining
Assuming the 90 days trading horizon The Investment is expected to generate 0.14 times more return on investment than Beowulf Mining. However, The Investment is 6.95 times less risky than Beowulf Mining. It trades about 0.09 of its potential returns per unit of risk. Beowulf Mining is currently generating about -0.1 per unit of risk. If you would invest 35,300 in The Investment on August 28, 2024 and sell it today you would earn a total of 2,300 from holding The Investment or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Investment vs. Beowulf Mining
Performance |
| Timeline |
| Investment |
| Beowulf Mining |
Investment and Beowulf Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Beowulf Mining
The main advantage of trading using opposite Investment and Beowulf Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Beowulf Mining 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 Beowulf Mining will offset losses from the drop in Beowulf Mining's long position.| Investment vs. Eastman Chemical Co | Investment vs. Universal Health Services | Investment vs. Associated British Foods | Investment vs. Direct Line Insurance |
| Beowulf Mining vs. Iron Mountain | Beowulf Mining vs. Zanaga Iron Ore | Beowulf Mining vs. Lords Grp Trading | Beowulf Mining vs. Kinnevik Investment AB |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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