Correlation Between North American and GLATFELTER
Can any of the company-specific risk be diversified away by investing in both North American and GLATFELTER 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 North American and GLATFELTER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and GLATFELTER, you can compare the effects of market volatilities on North American and GLATFELTER 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 North American with a short position of GLATFELTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and GLATFELTER.
Diversification Opportunities for North American and GLATFELTER
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and GLATFELTER is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and GLATFELTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLATFELTER and North American 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 North American Construction are associated (or correlated) with GLATFELTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLATFELTER has no effect on the direction of North American i.e., North American and GLATFELTER go up and down completely randomly.
Pair Corralation between North American and GLATFELTER
Assuming the 90 days horizon North American Construction is expected to generate 0.84 times more return on investment than GLATFELTER. However, North American Construction is 1.19 times less risky than GLATFELTER. It trades about 0.2 of its potential returns per unit of risk. GLATFELTER is currently generating about -0.04 per unit of risk. If you would invest 1,500 in North American Construction on September 19, 2024 and sell it today you would earn a total of 420.00 from holding North American Construction or generate 28.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. GLATFELTER
Performance |
| Timeline |
| North American Const |
| GLATFELTER |
North American and GLATFELTER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and GLATFELTER
The main advantage of trading using opposite North American and GLATFELTER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, GLATFELTER 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 GLATFELTER will offset losses from the drop in GLATFELTER's long position.| North American vs. NORTHEAST UTILITIES | North American vs. SK TELECOM TDADR | North American vs. SINGAPORE AIRLINES | North American vs. Gol Intelligent Airlines |
| GLATFELTER vs. Dairy Farm International | GLATFELTER vs. North American Construction | GLATFELTER vs. Chongqing Machinery Electric | GLATFELTER vs. ALEFARM BREWING DK 05 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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