Correlation Between Seaboard and Otter Tail
Can any of the company-specific risk be diversified away by investing in both Seaboard and Otter Tail 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 Seaboard and Otter Tail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seaboard and Otter Tail Corp, you can compare the effects of market volatilities on Seaboard and Otter Tail 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 Seaboard with a short position of Otter Tail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seaboard and Otter Tail.
Diversification Opportunities for Seaboard and Otter Tail
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seaboard and Otter is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and Otter Tail Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Tail Corp and Seaboard 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 Seaboard are associated (or correlated) with Otter Tail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Tail Corp has no effect on the direction of Seaboard i.e., Seaboard and Otter Tail go up and down completely randomly.
Pair Corralation between Seaboard and Otter Tail
Assuming the 90 days horizon Seaboard is expected to under-perform the Otter Tail. But the stock apears to be less risky and, when comparing its historical volatility, Seaboard is 1.12 times less risky than Otter Tail. The stock trades about 0.0 of its potential returns per unit of risk. The Otter Tail Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,407 in Otter Tail Corp on November 28, 2024 and sell it today you would earn a total of 293.00 from holding Otter Tail Corp or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seaboard vs. Otter Tail Corp
Performance |
| Timeline |
| Seaboard |
| Otter Tail Corp |
Seaboard and Otter Tail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seaboard and Otter Tail
The main advantage of trading using opposite Seaboard and Otter Tail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard position performs unexpectedly, Otter Tail 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 Otter Tail will offset losses from the drop in Otter Tail's long position.| Seaboard vs. PATTIES FOODS | Seaboard vs. China Foods Limited | Seaboard vs. STORE ELECTRONIC | Seaboard vs. KIMBALL ELECTRONICS |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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