Correlation Between DBA Sempra and Maiden Holdings
Can any of the company-specific risk be diversified away by investing in both DBA Sempra and Maiden Holdings 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 DBA Sempra and Maiden Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBA Sempra 5750 and Maiden Holdings North, you can compare the effects of market volatilities on DBA Sempra and Maiden Holdings 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 DBA Sempra with a short position of Maiden Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBA Sempra and Maiden Holdings.
Diversification Opportunities for DBA Sempra and Maiden Holdings
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DBA and Maiden is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding DBA Sempra 5750 and Maiden Holdings North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings North and DBA Sempra 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 DBA Sempra 5750 are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings North has no effect on the direction of DBA Sempra i.e., DBA Sempra and Maiden Holdings go up and down completely randomly.
Pair Corralation between DBA Sempra and Maiden Holdings
Given the investment horizon of 90 days DBA Sempra 5750 is expected to generate 0.37 times more return on investment than Maiden Holdings. However, DBA Sempra 5750 is 2.72 times less risky than Maiden Holdings. It trades about -0.21 of its potential returns per unit of risk. Maiden Holdings North is currently generating about -0.17 per unit of risk. If you would invest 2,500 in DBA Sempra 5750 on August 30, 2024 and sell it today you would lose (81.00) from holding DBA Sempra 5750 or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DBA Sempra 5750 vs. Maiden Holdings North
Performance |
| Timeline |
| DBA Sempra 5750 |
| Maiden Holdings North |
DBA Sempra and Maiden Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DBA Sempra and Maiden Holdings
The main advantage of trading using opposite DBA Sempra and Maiden Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBA Sempra position performs unexpectedly, Maiden Holdings 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 Maiden Holdings will offset losses from the drop in Maiden Holdings' long position.| DBA Sempra vs. Southern Co | DBA Sempra vs. CMS Energy Corp | DBA Sempra vs. Affiliated Managers Group | DBA Sempra vs. Southern Co |
| Maiden Holdings vs. Maiden Holdings | Maiden Holdings vs. Affiliated Managers Group | Maiden Holdings vs. Entergy New Orleans | Maiden Holdings vs. American Financial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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