Correlation Between Mairs Power and Rational/pier
Can any of the company-specific risk be diversified away by investing in both Mairs Power and Rational/pier 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 Mairs Power and Rational/pier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mairs Power Growth and Rationalpier 88 Convertible, you can compare the effects of market volatilities on Mairs Power and Rational/pier 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 Mairs Power with a short position of Rational/pier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Rational/pier.
Diversification Opportunities for Mairs Power and Rational/pier
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mairs and Rational/pier is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv and Mairs Power 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 Mairs Power Growth are associated (or correlated) with Rational/pier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Mairs Power i.e., Mairs Power and Rational/pier go up and down completely randomly.
Pair Corralation between Mairs Power and Rational/pier
Assuming the 90 days horizon Mairs Power Growth is expected to generate 2.02 times more return on investment than Rational/pier. However, Mairs Power is 2.02 times more volatile than Rationalpier 88 Convertible. It trades about 0.08 of its potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about 0.05 per unit of risk. If you would invest 12,162 in Mairs Power Growth on October 13, 2024 and sell it today you would earn a total of 4,922 from holding Mairs Power Growth or generate 40.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mairs Power Growth vs. Rationalpier 88 Convertible
Performance |
| Timeline |
| Mairs Power Growth |
| Rationalpier 88 Conv |
Mairs Power and Rational/pier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mairs Power and Rational/pier
The main advantage of trading using opposite Mairs Power and Rational/pier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power position performs unexpectedly, Rational/pier 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 Rational/pier will offset losses from the drop in Rational/pier's long position.| Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian Growth Fund |
| Rational/pier vs. Qs Growth Fund | Rational/pier vs. Mairs Power Growth | Rational/pier vs. Mid Cap Growth | Rational/pier vs. Eip Growth And |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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