Correlation Between Plug Power and Murata Manufacturing
Can any of the company-specific risk be diversified away by investing in both Plug Power and Murata Manufacturing 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 Plug Power and Murata Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plug Power and Murata Manufacturing Co, you can compare the effects of market volatilities on Plug Power and Murata Manufacturing 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 Plug Power with a short position of Murata Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plug Power and Murata Manufacturing.
Diversification Opportunities for Plug Power and Murata Manufacturing
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plug and Murata is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Murata Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing and Plug Power 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 Plug Power are associated (or correlated) with Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of Plug Power i.e., Plug Power and Murata Manufacturing go up and down completely randomly.
Pair Corralation between Plug Power and Murata Manufacturing
Assuming the 90 days trading horizon Plug Power is expected to under-perform the Murata Manufacturing. In addition to that, Plug Power is 3.16 times more volatile than Murata Manufacturing Co. It trades about -0.03 of its total potential returns per unit of risk. Murata Manufacturing Co is currently generating about -0.03 per unit of volatility. If you would invest 1,589 in Murata Manufacturing Co on September 3, 2024 and sell it today you would lose (23.00) from holding Murata Manufacturing Co or give up 1.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plug Power vs. Murata Manufacturing Co
Performance |
| Timeline |
| Plug Power |
| Murata Manufacturing |
Plug Power and Murata Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plug Power and Murata Manufacturing
The main advantage of trading using opposite Plug Power and Murata Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plug Power position performs unexpectedly, Murata Manufacturing 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 Murata Manufacturing will offset losses from the drop in Murata Manufacturing's long position.| Plug Power vs. Ballard Power Systems | Plug Power vs. Nel ASA | Plug Power vs. ITM Power Plc | Plug Power vs. Powercell Sweden |
| Murata Manufacturing vs. USWE SPORTS AB | Murata Manufacturing vs. Clearside Biomedical | Murata Manufacturing vs. BRIT AMER TOBACCO | Murata Manufacturing vs. TITANIUM TRANSPORTGROUP |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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