Correlation Between STORE ELECTRONIC and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and BROADWIND ENRGY 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 BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and BROADWIND ENRGY, you can compare the effects of market volatilities on STORE ELECTRONIC and BROADWIND ENRGY 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 BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and BROADWIND ENRGY.
Diversification Opportunities for STORE ELECTRONIC and BROADWIND ENRGY
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STORE and BROADWIND is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and BROADWIND ENRGY
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 0.98 times more return on investment than BROADWIND ENRGY. However, STORE ELECTRONIC is 1.02 times less risky than BROADWIND ENRGY. It trades about 0.03 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.02 per unit of risk. If you would invest 12,452 in STORE ELECTRONIC on September 3, 2024 and sell it today you would earn a total of 1,568 from holding STORE ELECTRONIC or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. BROADWIND ENRGY
Performance |
| Timeline |
| STORE ELECTRONIC |
| BROADWIND ENRGY |
STORE ELECTRONIC and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and BROADWIND ENRGY
The main advantage of trading using opposite STORE ELECTRONIC and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
| BROADWIND ENRGY vs. TOTAL GABON | BROADWIND ENRGY vs. Walgreens Boots Alliance | BROADWIND ENRGY vs. Peak Resources Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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