Correlation Between Pool and US Global
Can any of the company-specific risk be diversified away by investing in both Pool and US 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 US 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 US Global Investors, you can compare the effects of market volatilities on Pool and US 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and US Global.
Diversification Opportunities for Pool and US Global
Very good diversification
The 3 months correlation between Pool and GROW is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and US Global Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Investors 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Investors has no effect on the direction of Pool i.e., Pool and US Global go up and down completely randomly.
Pair Corralation between Pool and US Global
Given the investment horizon of 90 days Pool Corporation is expected to under-perform the US Global. In addition to that, Pool is 1.47 times more volatile than US Global Investors. It trades about -0.13 of its total potential returns per unit of risk. US Global Investors is currently generating about 0.03 per unit of volatility. If you would invest 242.00 in US Global Investors on November 28, 2024 and sell it today you would earn a total of 1.00 from holding US Global Investors or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pool Corp. vs. US Global Investors
Performance |
| Timeline |
| Pool |
| US Global Investors |
Pool and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and US Global
The main advantage of trading using opposite Pool and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool position performs unexpectedly, US 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 US Global will offset losses from the drop in US Global's long position.The idea behind Pool Corporation and US Global Investors 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.| US Global vs. Gladstone Investment | US Global vs. PennantPark Floating Rate | US Global vs. Horizon Technology Finance | US Global vs. Stellus Capital Investment |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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