Correlation Between Pepco Group and Carlson Investments
Can any of the company-specific risk be diversified away by investing in both Pepco Group and Carlson 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 Pepco Group and Carlson Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pepco Group BV and Carlson Investments SA, you can compare the effects of market volatilities on Pepco Group and Carlson 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 Pepco Group with a short position of Carlson Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepco Group and Carlson Investments.
Diversification Opportunities for Pepco Group and Carlson Investments
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pepco and Carlson is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pepco Group BV and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments and Pepco Group 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 Pepco Group BV are associated (or correlated) with Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of Pepco Group i.e., Pepco Group and Carlson Investments go up and down completely randomly.
Pair Corralation between Pepco Group and Carlson Investments
Assuming the 90 days trading horizon Pepco Group BV is expected to under-perform the Carlson Investments. But the stock apears to be less risky and, when comparing its historical volatility, Pepco Group BV is 2.29 times less risky than Carlson Investments. The stock trades about -0.16 of its potential returns per unit of risk. The Carlson Investments SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 384.00 in Carlson Investments SA on September 1, 2024 and sell it today you would earn a total of 63.00 from holding Carlson Investments SA or generate 16.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pepco Group BV vs. Carlson Investments SA
Performance |
| Timeline |
| Pepco Group BV |
| Carlson Investments |
Pepco Group and Carlson Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pepco Group and Carlson Investments
The main advantage of trading using opposite Pepco Group and Carlson Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepco Group position performs unexpectedly, Carlson 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 Carlson Investments will offset losses from the drop in Carlson Investments' long position.| Pepco Group vs. Immobile | Pepco Group vs. LSI Software SA | Pepco Group vs. Intersport Polska SA | Pepco Group vs. Mlk Foods Public |
| Carlson Investments vs. Asseco Business Solutions | Carlson Investments vs. Detalion Games SA | Carlson Investments vs. Asseco South Eastern | Carlson Investments vs. CFI Holding SA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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