Correlation Between Mutual Of and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Mutual Of and HE Equipment 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 Mutual Of and HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and HE Equipment Services, you can compare the effects of market volatilities on Mutual Of and HE Equipment 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 Mutual Of with a short position of HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and HE Equipment.
Diversification Opportunities for Mutual Of and HE Equipment
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mutual and HEES is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services and Mutual Of 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 Mutual Of America are associated (or correlated) with HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Mutual Of i.e., Mutual Of and HE Equipment go up and down completely randomly.
Pair Corralation between Mutual Of and HE Equipment
Assuming the 90 days horizon Mutual Of is expected to generate 3.44 times less return on investment than HE Equipment. But when comparing it to its historical volatility, Mutual Of America is 4.87 times less risky than HE Equipment. It trades about 0.05 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,113 in HE Equipment Services on August 23, 2024 and sell it today you would earn a total of 1,561 from holding HE Equipment Services or generate 37.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mutual Of America vs. HE Equipment Services
Performance |
| Timeline |
| Mutual Of America |
| HE Equipment Services |
Mutual Of and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and HE Equipment
The main advantage of trading using opposite Mutual Of and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Mutual Of vs. Vanguard Target Retirement | Mutual Of vs. ABIVAX Socit Anonyme | Mutual Of vs. SCOR PK | Mutual Of vs. HUMANA INC |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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