Correlation Between Douglas Dynamics and Greenbrier Companies
Can any of the company-specific risk be diversified away by investing in both Douglas Dynamics and Greenbrier Companies 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 Douglas Dynamics and Greenbrier Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Dynamics and Greenbrier Companies, you can compare the effects of market volatilities on Douglas Dynamics and Greenbrier Companies 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 Douglas Dynamics with a short position of Greenbrier Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Dynamics and Greenbrier Companies.
Diversification Opportunities for Douglas Dynamics and Greenbrier Companies
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Douglas and Greenbrier is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics and Greenbrier Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenbrier Companies and Douglas Dynamics 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 Douglas Dynamics are associated (or correlated) with Greenbrier Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenbrier Companies has no effect on the direction of Douglas Dynamics i.e., Douglas Dynamics and Greenbrier Companies go up and down completely randomly.
Pair Corralation between Douglas Dynamics and Greenbrier Companies
Given the investment horizon of 90 days Douglas Dynamics is expected to generate 1.27 times more return on investment than Greenbrier Companies. However, Douglas Dynamics is 1.27 times more volatile than Greenbrier Companies. It trades about 0.23 of its potential returns per unit of risk. Greenbrier Companies is currently generating about 0.27 per unit of risk. If you would invest 2,297 in Douglas Dynamics on August 30, 2024 and sell it today you would earn a total of 267.00 from holding Douglas Dynamics or generate 11.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Douglas Dynamics vs. Greenbrier Companies
Performance |
| Timeline |
| Douglas Dynamics |
| Greenbrier Companies |
Douglas Dynamics and Greenbrier Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Dynamics and Greenbrier Companies
The main advantage of trading using opposite Douglas Dynamics and Greenbrier Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Dynamics position performs unexpectedly, Greenbrier Companies 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 Greenbrier Companies will offset losses from the drop in Greenbrier Companies' long position.| Douglas Dynamics vs. Monro Muffler Brake | Douglas Dynamics vs. Motorcar Parts of | Douglas Dynamics vs. Standard Motor Products | Douglas Dynamics vs. Stoneridge |
| Greenbrier Companies vs. LB Foster | Greenbrier Companies vs. Freightcar America | Greenbrier Companies vs. Westinghouse Air Brake | Greenbrier Companies vs. CSX Corporation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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