Correlation Between STORE ELECTRONIC and Providence Gold
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and Providence Gold 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 STORE ELECTRONIC and Providence Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and Providence Gold Mines, you can compare the effects of market volatilities on STORE ELECTRONIC and Providence Gold 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 STORE ELECTRONIC with a short position of Providence Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and Providence Gold.
Diversification Opportunities for STORE ELECTRONIC and Providence Gold
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STORE and Providence is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and Providence Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Providence Gold Mines and STORE ELECTRONIC 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 STORE ELECTRONIC are associated (or correlated) with Providence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Providence Gold Mines has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and Providence Gold go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and Providence Gold
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to under-perform the Providence Gold. But the stock apears to be less risky and, when comparing its historical volatility, STORE ELECTRONIC is 14.65 times less risky than Providence Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Providence Gold Mines is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.25 in Providence Gold Mines on September 13, 2024 and sell it today you would lose (0.20) from holding Providence Gold Mines or give up 16.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. Providence Gold Mines
Performance |
| Timeline |
| STORE ELECTRONIC |
| Providence Gold Mines |
STORE ELECTRONIC and Providence Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and Providence Gold
The main advantage of trading using opposite STORE ELECTRONIC and Providence Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, Providence Gold 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 Providence Gold will offset losses from the drop in Providence Gold's long position.| STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc | STORE ELECTRONIC vs. Apple Inc |
| Providence Gold vs. PPHE HOTEL GROUP | Providence Gold vs. Dalata Hotel Group | Providence Gold vs. CECO ENVIRONMENTAL | Providence Gold vs. DALATA HOTEL |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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