Correlation Between Potash America and Sack Lunch
Can any of the company-specific risk be diversified away by investing in both Potash America and Sack Lunch 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 Potash America and Sack Lunch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potash America and Sack Lunch Productions, you can compare the effects of market volatilities on Potash America and Sack Lunch 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 Potash America with a short position of Sack Lunch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potash America and Sack Lunch.
Diversification Opportunities for Potash America and Sack Lunch
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Potash and Sack is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Potash America and Sack Lunch Productions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sack Lunch Productions and Potash America 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 Potash America are associated (or correlated) with Sack Lunch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sack Lunch Productions has no effect on the direction of Potash America i.e., Potash America and Sack Lunch go up and down completely randomly.
Pair Corralation between Potash America and Sack Lunch
Given the investment horizon of 90 days Potash America is expected to generate 3.17 times less return on investment than Sack Lunch. But when comparing it to its historical volatility, Potash America is 1.8 times less risky than Sack Lunch. It trades about 0.04 of its potential returns per unit of risk. Sack Lunch Productions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.40 in Sack Lunch Productions on August 28, 2024 and sell it today you would lose (0.60) from holding Sack Lunch Productions or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Potash America vs. Sack Lunch Productions
Performance |
| Timeline |
| Potash America |
| Sack Lunch Productions |
Potash America and Sack Lunch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potash America and Sack Lunch
The main advantage of trading using opposite Potash America and Sack Lunch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potash America position performs unexpectedly, Sack Lunch 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 Sack Lunch will offset losses from the drop in Sack Lunch's long position.| Potash America vs. Ascendant Resources | Potash America vs. Cantex Mine Development | Potash America vs. Amarc Resources | Potash America vs. Sterling Metals Corp |
| Sack Lunch vs. Aerius International | Sack Lunch vs. Potash America | Sack Lunch vs. Blue Diamond Ventures | Sack Lunch vs. Daniels Corporate Advisory |
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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