Correlation Between Stanley Electric and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Stanley Electric and HomeToGo 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 Stanley Electric and HomeToGo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stanley Electric Co and HomeToGo SE, you can compare the effects of market volatilities on Stanley Electric and HomeToGo 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 Stanley Electric with a short position of HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stanley Electric and HomeToGo.
Diversification Opportunities for Stanley Electric and HomeToGo
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stanley and HomeToGo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stanley Electric Co and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and Stanley Electric 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 Stanley Electric Co are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Stanley Electric i.e., Stanley Electric and HomeToGo go up and down completely randomly.
Pair Corralation between Stanley Electric and HomeToGo
Assuming the 90 days trading horizon Stanley Electric Co is expected to generate 0.56 times more return on investment than HomeToGo. However, Stanley Electric Co is 1.79 times less risky than HomeToGo. It trades about -0.01 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.01 per unit of risk. If you would invest 1,730 in Stanley Electric Co on September 26, 2024 and sell it today you would lose (200.00) from holding Stanley Electric Co or give up 11.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stanley Electric Co vs. HomeToGo SE
Performance |
| Timeline |
| Stanley Electric |
| HomeToGo SE |
Stanley Electric and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stanley Electric and HomeToGo
The main advantage of trading using opposite Stanley Electric and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stanley Electric position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| Stanley Electric vs. HomeToGo SE | Stanley Electric vs. Taylor Morrison Home | Stanley Electric vs. KB HOME | Stanley Electric vs. American Homes 4 |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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