Correlation Between MotorCycle Holdings and Argo Investments
Can any of the company-specific risk be diversified away by investing in both MotorCycle Holdings and Argo Investments 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 MotorCycle Holdings and Argo Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MotorCycle Holdings and Argo Investments, you can compare the effects of market volatilities on MotorCycle Holdings and Argo Investments 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 MotorCycle Holdings with a short position of Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of MotorCycle Holdings and Argo Investments.
Diversification Opportunities for MotorCycle Holdings and Argo Investments
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MotorCycle and Argo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments and MotorCycle Holdings 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 MotorCycle Holdings are associated (or correlated) with Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of MotorCycle Holdings i.e., MotorCycle Holdings and Argo Investments go up and down completely randomly.
Pair Corralation between MotorCycle Holdings and Argo Investments
Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 5.9 times more return on investment than Argo Investments. However, MotorCycle Holdings is 5.9 times more volatile than Argo Investments. It trades about 0.04 of its potential returns per unit of risk. Argo Investments is currently generating about 0.06 per unit of risk. If you would invest 139.00 in MotorCycle Holdings on September 2, 2024 and sell it today you would earn a total of 46.00 from holding MotorCycle Holdings or generate 33.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MotorCycle Holdings vs. Argo Investments
Performance |
| Timeline |
| MotorCycle Holdings |
| Argo Investments |
MotorCycle Holdings and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MotorCycle Holdings and Argo Investments
The main advantage of trading using opposite MotorCycle Holdings and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MotorCycle Holdings position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.| MotorCycle Holdings vs. Summit Resources Limited | MotorCycle Holdings vs. iShares Global Healthcare | MotorCycle Holdings vs. Australian Dairy Farms | MotorCycle Holdings vs. Adriatic Metals Plc |
| Argo Investments vs. WA1 Resources | Argo Investments vs. Predictive Discovery | Argo Investments vs. Cooper Metals | Argo Investments vs. OD6 Metals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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