Correlation Between Pigeon Corp and Culp
Can any of the company-specific risk be diversified away by investing in both Pigeon Corp and Culp 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 Pigeon Corp and Culp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pigeon Corp ADR and Culp Inc, you can compare the effects of market volatilities on Pigeon Corp and Culp 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 Pigeon Corp with a short position of Culp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pigeon Corp and Culp.
Diversification Opportunities for Pigeon Corp and Culp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pigeon and Culp is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Pigeon Corp ADR and Culp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Culp Inc and Pigeon Corp 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 Pigeon Corp ADR are associated (or correlated) with Culp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Culp Inc has no effect on the direction of Pigeon Corp i.e., Pigeon Corp and Culp go up and down completely randomly.
Pair Corralation between Pigeon Corp and Culp
Assuming the 90 days horizon Pigeon Corp ADR is expected to generate 1.87 times more return on investment than Culp. However, Pigeon Corp is 1.87 times more volatile than Culp Inc. It trades about -0.05 of its potential returns per unit of risk. Culp Inc is currently generating about -0.18 per unit of risk. If you would invest 242.00 in Pigeon Corp ADR on August 28, 2024 and sell it today you would lose (10.00) from holding Pigeon Corp ADR or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pigeon Corp ADR vs. Culp Inc
Performance |
| Timeline |
| Pigeon Corp ADR |
| Culp Inc |
Pigeon Corp and Culp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pigeon Corp and Culp
The main advantage of trading using opposite Pigeon Corp and Culp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pigeon Corp position performs unexpectedly, Culp 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 Culp will offset losses from the drop in Culp's long position.| Pigeon Corp vs. LOreal Co ADR | Pigeon Corp vs. Unilever PLC ADR | Pigeon Corp vs. Kimberly Clark | Pigeon Corp vs. The Clorox |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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