Correlation Between Therma Bright and DynaCERT
Can any of the company-specific risk be diversified away by investing in both Therma Bright and DynaCERT 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 Therma Bright and DynaCERT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and DynaCERT, you can compare the effects of market volatilities on Therma Bright and DynaCERT 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 Therma Bright with a short position of DynaCERT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and DynaCERT.
Diversification Opportunities for Therma Bright and DynaCERT
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Therma and DynaCERT is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and DynaCERT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DynaCERT and Therma Bright 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 Therma Bright are associated (or correlated) with DynaCERT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DynaCERT has no effect on the direction of Therma Bright i.e., Therma Bright and DynaCERT go up and down completely randomly.
Pair Corralation between Therma Bright and DynaCERT
Assuming the 90 days trading horizon Therma Bright is expected to generate 2.42 times more return on investment than DynaCERT. However, Therma Bright is 2.42 times more volatile than DynaCERT. It trades about 0.04 of its potential returns per unit of risk. DynaCERT is currently generating about 0.03 per unit of risk. If you would invest 7.50 in Therma Bright on September 4, 2024 and sell it today you would lose (5.00) from holding Therma Bright or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Therma Bright vs. DynaCERT
Performance |
| Timeline |
| Therma Bright |
| DynaCERT |
Therma Bright and DynaCERT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Therma Bright and DynaCERT
The main advantage of trading using opposite Therma Bright and DynaCERT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright position performs unexpectedly, DynaCERT 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 DynaCERT will offset losses from the drop in DynaCERT's long position.| Therma Bright vs. Walmart Inc CDR | Therma Bright vs. Amazon CDR | Therma Bright vs. Berkshire Hathaway CDR | Therma Bright vs. UnitedHealth Group CDR |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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