Correlation Between Douglas Dynamics and Strattec Security
Can any of the company-specific risk be diversified away by investing in both Douglas Dynamics and Strattec Security 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 Strattec Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Dynamics and Strattec Security, you can compare the effects of market volatilities on Douglas Dynamics and Strattec Security 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 Strattec Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Dynamics and Strattec Security.
Diversification Opportunities for Douglas Dynamics and Strattec Security
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Douglas and Strattec is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics and Strattec Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattec Security 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 Strattec Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattec Security has no effect on the direction of Douglas Dynamics i.e., Douglas Dynamics and Strattec Security go up and down completely randomly.
Pair Corralation between Douglas Dynamics and Strattec Security
Given the investment horizon of 90 days Douglas Dynamics is expected to under-perform the Strattec Security. But the stock apears to be less risky and, when comparing its historical volatility, Douglas Dynamics is 1.36 times less risky than Strattec Security. The stock trades about 0.0 of its potential returns per unit of risk. The Strattec Security is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,036 in Strattec Security on November 1, 2024 and sell it today you would earn a total of 1,822 from holding Strattec Security or generate 89.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Dynamics vs. Strattec Security
Performance |
| Timeline |
| Douglas Dynamics |
| Strattec Security |
Douglas Dynamics and Strattec Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Dynamics and Strattec Security
The main advantage of trading using opposite Douglas Dynamics and Strattec Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Dynamics position performs unexpectedly, Strattec Security 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 Strattec Security will offset losses from the drop in Strattec Security's long position.| Douglas Dynamics vs. Monro Muffler Brake | Douglas Dynamics vs. Motorcar Parts of | Douglas Dynamics vs. Standard Motor Products | Douglas Dynamics vs. Stoneridge |
| Strattec Security vs. Dorman Products | Strattec Security vs. Douglas Dynamics | Strattec Security vs. Monro Muffler Brake | Strattec Security vs. Motorcar Parts of |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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