Correlation Between STORE ELECTRONIC and Associated British
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and Associated British 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 Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and Associated British Foods, you can compare the effects of market volatilities on STORE ELECTRONIC and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and Associated British.
Diversification Opportunities for STORE ELECTRONIC and Associated British
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between STORE and Associated is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and Associated British go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and Associated British
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 3.03 times more return on investment than Associated British. However, STORE ELECTRONIC is 3.03 times more volatile than Associated British Foods. It trades about 0.05 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.02 per unit of risk. If you would invest 10,656 in STORE ELECTRONIC on November 3, 2024 and sell it today you would earn a total of 6,224 from holding STORE ELECTRONIC or generate 58.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
STORE ELECTRONIC vs. Associated British Foods
Performance |
| Timeline |
| STORE ELECTRONIC |
| Associated British Foods |
STORE ELECTRONIC and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and Associated British
The main advantage of trading using opposite STORE ELECTRONIC and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| STORE ELECTRONIC vs. IMAGIN MEDICAL INC | STORE ELECTRONIC vs. MeVis Medical Solutions | STORE ELECTRONIC vs. Magic Software Enterprises | STORE ELECTRONIC vs. Apollo Medical Holdings |
| Associated British vs. National Retail Properties | Associated British vs. LOANDEPOT INC A | Associated British vs. PICKN PAY STORES | Associated British vs. RETAIL FOOD GROUP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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