Correlation Between Prestige Consumer and Corporate Office
Can any of the company-specific risk be diversified away by investing in both Prestige Consumer and Corporate Office 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 Prestige Consumer and Corporate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Consumer Healthcare and Corporate Office Properties, you can compare the effects of market volatilities on Prestige Consumer and Corporate Office 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 Prestige Consumer with a short position of Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Consumer and Corporate Office.
Diversification Opportunities for Prestige Consumer and Corporate Office
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prestige and Corporate is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Consumer Healthcare and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro and Prestige Consumer 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 Prestige Consumer Healthcare are associated (or correlated) with Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Prestige Consumer i.e., Prestige Consumer and Corporate Office go up and down completely randomly.
Pair Corralation between Prestige Consumer and Corporate Office
Assuming the 90 days horizon Prestige Consumer Healthcare is expected to generate 1.26 times more return on investment than Corporate Office. However, Prestige Consumer is 1.26 times more volatile than Corporate Office Properties. It trades about 0.1 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.06 per unit of risk. If you would invest 6,250 in Prestige Consumer Healthcare on November 3, 2024 and sell it today you would earn a total of 1,250 from holding Prestige Consumer Healthcare or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Consumer Healthcare vs. Corporate Office Properties
Performance |
| Timeline |
| Prestige Consumer |
| Corporate Office Pro |
Prestige Consumer and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Consumer and Corporate Office
The main advantage of trading using opposite Prestige Consumer and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Consumer position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| Prestige Consumer vs. SENECA FOODS A | Prestige Consumer vs. Thai Beverage Public | Prestige Consumer vs. PLANT VEDA FOODS | Prestige Consumer vs. Coffee Holding Co |
| Corporate Office vs. GREENX METALS LTD | Corporate Office vs. Keck Seng Investments | Corporate Office vs. Virtus Investment Partners | Corporate Office vs. Scottish Mortgage Investment |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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