Correlation Between SERI INDUSTRIAL and Major Drilling
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL and Major Drilling 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 SERI INDUSTRIAL and Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and Major Drilling Group, you can compare the effects of market volatilities on SERI INDUSTRIAL and Major Drilling 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 SERI INDUSTRIAL with a short position of Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and Major Drilling.
Diversification Opportunities for SERI INDUSTRIAL and Major Drilling
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between SERI and Major is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and Major Drilling go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and Major Drilling
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to generate 2.06 times more return on investment than Major Drilling. However, SERI INDUSTRIAL is 2.06 times more volatile than Major Drilling Group. It trades about 0.04 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.06 per unit of risk. If you would invest 283.00 in SERI INDUSTRIAL EO on September 3, 2024 and sell it today you would earn a total of 5.00 from holding SERI INDUSTRIAL EO or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. Major Drilling Group
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| Major Drilling Group |
SERI INDUSTRIAL and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and Major Drilling
The main advantage of trading using opposite SERI INDUSTRIAL and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc |
| Major Drilling vs. Commercial Vehicle Group | Major Drilling vs. Citic Telecom International | Major Drilling vs. Hemisphere Energy Corp | Major Drilling vs. Spirent Communications plc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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