Correlation Between National Storm and Gencor Industries
Can any of the company-specific risk be diversified away by investing in both National Storm and Gencor Industries 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 National Storm and Gencor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storm Recovery and Gencor Industries, you can compare the effects of market volatilities on National Storm and Gencor Industries 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 National Storm with a short position of Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storm and Gencor Industries.
Diversification Opportunities for National Storm and Gencor Industries
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Gencor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Storm Recovery and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries and National Storm 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 National Storm Recovery are associated (or correlated) with Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of National Storm i.e., National Storm and Gencor Industries go up and down completely randomly.
Pair Corralation between National Storm and Gencor Industries
Given the investment horizon of 90 days National Storm Recovery is expected to under-perform the Gencor Industries. In addition to that, National Storm is 3.48 times more volatile than Gencor Industries. It trades about -0.34 of its total potential returns per unit of risk. Gencor Industries is currently generating about 0.15 per unit of volatility. If you would invest 2,015 in Gencor Industries on August 29, 2024 and sell it today you would earn a total of 155.00 from holding Gencor Industries or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storm Recovery vs. Gencor Industries
Performance |
| Timeline |
| National Storm Recovery |
| Gencor Industries |
National Storm and Gencor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storm and Gencor Industries
The main advantage of trading using opposite National Storm and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storm position performs unexpectedly, Gencor Industries 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.| National Storm vs. Interfor | National Storm vs. Western Forest Products | National Storm vs. Stella Jones | National Storm vs. Simpson Manufacturing |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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