Correlation Between BANK MANDIRI and Tractor Supply
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Tractor Supply 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 BANK MANDIRI and Tractor Supply into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and Tractor Supply, you can compare the effects of market volatilities on BANK MANDIRI and Tractor Supply 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 BANK MANDIRI with a short position of Tractor Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Tractor Supply.
Diversification Opportunities for BANK MANDIRI and Tractor Supply
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and Tractor is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply and BANK MANDIRI 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 BANK MANDIRI are associated (or correlated) with Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Tractor Supply go up and down completely randomly.
Pair Corralation between BANK MANDIRI and Tractor Supply
Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Tractor Supply. In addition to that, BANK MANDIRI is 1.98 times more volatile than Tractor Supply. It trades about -0.16 of its total potential returns per unit of risk. Tractor Supply is currently generating about -0.12 per unit of volatility. If you would invest 5,353 in Tractor Supply on September 24, 2024 and sell it today you would lose (213.00) from holding Tractor Supply or give up 3.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. Tractor Supply
Performance |
| Timeline |
| BANK MANDIRI |
| Tractor Supply |
BANK MANDIRI and Tractor Supply Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and Tractor Supply
The main advantage of trading using opposite BANK MANDIRI and Tractor Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, Tractor Supply 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 Tractor Supply will offset losses from the drop in Tractor Supply's long position.| BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Microsoft |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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