Correlation Between PM Capital and Staude Capital
Can any of the company-specific risk be diversified away by investing in both PM Capital and Staude Capital 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 PM Capital and Staude Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PM Capital Global and Staude Capital Global, you can compare the effects of market volatilities on PM Capital and Staude Capital 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 PM Capital with a short position of Staude Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PM Capital and Staude Capital.
Diversification Opportunities for PM Capital and Staude Capital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PGF and Staude is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Staude Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staude Capital Global and PM Capital 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 PM Capital Global are associated (or correlated) with Staude Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staude Capital Global has no effect on the direction of PM Capital i.e., PM Capital and Staude Capital go up and down completely randomly.
Pair Corralation between PM Capital and Staude Capital
Assuming the 90 days trading horizon PM Capital Global is expected to under-perform the Staude Capital. In addition to that, PM Capital is 1.3 times more volatile than Staude Capital Global. It trades about -0.04 of its total potential returns per unit of risk. Staude Capital Global is currently generating about 0.04 per unit of volatility. If you would invest 130.00 in Staude Capital Global on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Staude Capital Global or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PM Capital Global vs. Staude Capital Global
Performance |
| Timeline |
| PM Capital Global |
| Staude Capital Global |
PM Capital and Staude Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PM Capital and Staude Capital
The main advantage of trading using opposite PM Capital and Staude Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PM Capital position performs unexpectedly, Staude Capital 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 Staude Capital will offset losses from the drop in Staude Capital's long position.| PM Capital vs. National Australia Bank | PM Capital vs. National Australia Bank | PM Capital vs. Westpac Banking | PM Capital vs. National Australia Bank |
| Staude Capital vs. National Australia Bank | Staude Capital vs. National Australia Bank | Staude Capital vs. Westpac Banking | Staude Capital vs. National Australia Bank |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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