Correlation Between Mairs Power and Sound Shore
Can any of the company-specific risk be diversified away by investing in both Mairs Power and Sound Shore 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 Sound Shore 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 Sound Shore Fund, you can compare the effects of market volatilities on Mairs Power and Sound Shore 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 Sound Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Sound Shore.
Diversification Opportunities for Mairs Power and Sound Shore
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mairs and Sound is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore Fund 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 Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Mairs Power i.e., Mairs Power and Sound Shore go up and down completely randomly.
Pair Corralation between Mairs Power and Sound Shore
Assuming the 90 days horizon Mairs Power Growth is expected to generate 0.69 times more return on investment than Sound Shore. However, Mairs Power Growth is 1.45 times less risky than Sound Shore. It trades about 0.09 of its potential returns per unit of risk. Sound Shore Fund is currently generating about 0.01 per unit of risk. If you would invest 12,553 in Mairs Power Growth on October 25, 2024 and sell it today you would earn a total of 5,152 from holding Mairs Power Growth or generate 41.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mairs Power Growth vs. Sound Shore Fund
Performance |
| Timeline |
| Mairs Power Growth |
| Sound Shore Fund |
Mairs Power and Sound Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mairs Power and Sound Shore
The main advantage of trading using opposite Mairs Power and Sound Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power position performs unexpectedly, Sound Shore 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 Sound Shore will offset losses from the drop in Sound Shore'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 |
| Sound Shore vs. Transamerica Intermediate Muni | Sound Shore vs. Blrc Sgy Mnp | Sound Shore vs. Blackrock Pa Muni | Sound Shore vs. Lord Abbett Intermediate |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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