Correlation Between MasterBrand and SES AI
Can any of the company-specific risk be diversified away by investing in both MasterBrand and SES AI 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 MasterBrand and SES AI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MasterBrand and SES AI Corp, you can compare the effects of market volatilities on MasterBrand and SES AI 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 MasterBrand with a short position of SES AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of MasterBrand and SES AI.
Diversification Opportunities for MasterBrand and SES AI
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MasterBrand and SES is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand and SES AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES AI Corp and MasterBrand 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 MasterBrand are associated (or correlated) with SES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES AI Corp has no effect on the direction of MasterBrand i.e., MasterBrand and SES AI go up and down completely randomly.
Pair Corralation between MasterBrand and SES AI
Considering the 90-day investment horizon MasterBrand is expected to generate 0.33 times more return on investment than SES AI. However, MasterBrand is 3.05 times less risky than SES AI. It trades about 0.06 of its potential returns per unit of risk. SES AI Corp is currently generating about -0.24 per unit of risk. If you would invest 1,604 in MasterBrand on August 30, 2024 and sell it today you would earn a total of 114.00 from holding MasterBrand or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MasterBrand vs. SES AI Corp
Performance |
| Timeline |
| MasterBrand |
| SES AI Corp |
MasterBrand and SES AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MasterBrand and SES AI
The main advantage of trading using opposite MasterBrand and SES AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasterBrand position performs unexpectedly, SES AI 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 SES AI will offset losses from the drop in SES AI's long position.| MasterBrand vs. Bassett Furniture Industries | MasterBrand vs. Ethan Allen Interiors | MasterBrand vs. Natuzzi SpA | MasterBrand vs. Flexsteel Industries |
| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI 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 Stocks Directory module to find actively traded stocks across global markets.
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