Correlation Between Ammo and Innovative Solutions
Can any of the company-specific risk be diversified away by investing in both Ammo and Innovative Solutions 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 Ammo and Innovative Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ammo Inc and Innovative Solutions and, you can compare the effects of market volatilities on Ammo and Innovative Solutions 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 Ammo with a short position of Innovative Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ammo and Innovative Solutions.
Diversification Opportunities for Ammo and Innovative Solutions
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ammo and Innovative is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ammo Inc and Innovative Solutions and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Solutions and and Ammo 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 Ammo Inc are associated (or correlated) with Innovative Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Solutions and has no effect on the direction of Ammo i.e., Ammo and Innovative Solutions go up and down completely randomly.
Pair Corralation between Ammo and Innovative Solutions
Given the investment horizon of 90 days Ammo Inc is expected to generate 3.22 times more return on investment than Innovative Solutions. However, Ammo is 3.22 times more volatile than Innovative Solutions and. It trades about 0.1 of its potential returns per unit of risk. Innovative Solutions and is currently generating about 0.24 per unit of risk. If you would invest 112.00 in Ammo Inc on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Ammo Inc or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ammo Inc vs. Innovative Solutions and
Performance |
| Timeline |
| Ammo Inc |
| Innovative Solutions and |
Ammo and Innovative Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ammo and Innovative Solutions
The main advantage of trading using opposite Ammo and Innovative Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ammo position performs unexpectedly, Innovative Solutions 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 Innovative Solutions will offset losses from the drop in Innovative Solutions' long position.| Ammo vs. Sturm Ruger | Ammo vs. Kratos Defense Security | Ammo vs. VSE Corporation | Ammo vs. Smith Wesson Brands |
| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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