Correlation Between Pool and Graf Global
Can any of the company-specific risk be diversified away by investing in both Pool and Graf Global 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 Pool and Graf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and Graf Global Corp, you can compare the effects of market volatilities on Pool and Graf Global 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 Pool with a short position of Graf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and Graf Global.
Diversification Opportunities for Pool and Graf Global
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pool and Graf is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Graf Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Global Corp and Pool 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 Pool Corporation are associated (or correlated) with Graf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Global Corp has no effect on the direction of Pool i.e., Pool and Graf Global go up and down completely randomly.
Pair Corralation between Pool and Graf Global
Given the investment horizon of 90 days Pool Corporation is expected to generate 22.86 times more return on investment than Graf Global. However, Pool is 22.86 times more volatile than Graf Global Corp. It trades about 0.11 of its potential returns per unit of risk. Graf Global Corp is currently generating about 0.05 per unit of risk. If you would invest 36,042 in Pool Corporation on September 1, 2024 and sell it today you would earn a total of 1,667 from holding Pool Corporation or generate 4.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pool Corp. vs. Graf Global Corp
Performance |
| Timeline |
| Pool |
| Graf Global Corp |
Pool and Graf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and Graf Global
The main advantage of trading using opposite Pool and Graf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool position performs unexpectedly, Graf Global 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 Graf Global will offset losses from the drop in Graf Global's long position.The idea behind Pool Corporation and Graf Global Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Graf Global vs. Adient PLC | Graf Global vs. Constellation Brands Class | Graf Global vs. Magna International | Graf Global vs. Gentex |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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