Correlation Between Seaboard and TransAlta
Can any of the company-specific risk be diversified away by investing in both Seaboard and TransAlta 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 TransAlta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seaboard and TransAlta, you can compare the effects of market volatilities on Seaboard and TransAlta 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 TransAlta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seaboard and TransAlta.
Diversification Opportunities for Seaboard and TransAlta
Excellent diversification
The 3 months correlation between Seaboard and TransAlta is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and TransAlta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta 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 TransAlta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta has no effect on the direction of Seaboard i.e., Seaboard and TransAlta go up and down completely randomly.
Pair Corralation between Seaboard and TransAlta
Assuming the 90 days horizon Seaboard is expected to under-perform the TransAlta. But the stock apears to be less risky and, when comparing its historical volatility, Seaboard is 1.87 times less risky than TransAlta. The stock trades about -0.1 of its potential returns per unit of risk. The TransAlta is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 651.00 in TransAlta on August 29, 2024 and sell it today you would earn a total of 362.00 from holding TransAlta or generate 55.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seaboard vs. TransAlta
Performance |
| Timeline |
| Seaboard |
| TransAlta |
Seaboard and TransAlta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seaboard and TransAlta
The main advantage of trading using opposite Seaboard and TransAlta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard position performs unexpectedly, TransAlta 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 TransAlta will offset losses from the drop in TransAlta's long position.| Seaboard vs. Honeywell International | Seaboard vs. Mitsubishi | Seaboard vs. Superior Plus Corp | Seaboard vs. NMI Holdings |
| TransAlta vs. CN YANGTPWR GDR | TransAlta vs. Superior Plus Corp | TransAlta vs. SIVERS SEMICONDUCTORS AB | TransAlta vs. Talanx AG |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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