Correlation Between Spectrum Brands and Metalink
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands and Metalink 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 Spectrum Brands and Metalink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Metalink, you can compare the effects of market volatilities on Spectrum Brands and Metalink 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 Spectrum Brands with a short position of Metalink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Metalink.
Diversification Opportunities for Spectrum Brands and Metalink
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spectrum and Metalink is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink and Spectrum Brands 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 Spectrum Brands Holdings are associated (or correlated) with Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of Spectrum Brands i.e., Spectrum Brands and Metalink go up and down completely randomly.
Pair Corralation between Spectrum Brands and Metalink
Considering the 90-day investment horizon Spectrum Brands Holdings is expected to generate 3.35 times more return on investment than Metalink. However, Spectrum Brands is 3.35 times more volatile than Metalink. It trades about 0.09 of its potential returns per unit of risk. Metalink is currently generating about 0.22 per unit of risk. If you would invest 9,118 in Spectrum Brands Holdings on September 5, 2024 and sell it today you would earn a total of 284.00 from holding Spectrum Brands Holdings or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Metalink
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Metalink |
Spectrum Brands and Metalink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and Metalink
The main advantage of trading using opposite Spectrum Brands and Metalink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands position performs unexpectedly, Metalink 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 Metalink will offset losses from the drop in Metalink's long position.| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
| Metalink vs. Eline Entertainment Group | Metalink vs. Green Leaf Innovations | Metalink vs. Plandai Biotech | Metalink vs. All American Gld |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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