Correlation Between Team and All American
Can any of the company-specific risk be diversified away by investing in both Team and All American 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 Team and All American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Team Inc and All American Pet, you can compare the effects of market volatilities on Team and All American 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 Team with a short position of All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team and All American.
Diversification Opportunities for Team and All American
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Team and All is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and All American Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Pet and Team 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 Team Inc are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Pet has no effect on the direction of Team i.e., Team and All American go up and down completely randomly.
Pair Corralation between Team and All American
If you would invest 1,369 in Team Inc on November 3, 2024 and sell it today you would earn a total of 311.00 from holding Team Inc or generate 22.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Team Inc vs. All American Pet
Performance |
| Timeline |
| Team Inc |
| All American Pet |
Team and All American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Team and All American
The main advantage of trading using opposite Team and All American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team position performs unexpectedly, All American 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 All American will offset losses from the drop in All American's long position.The idea behind Team Inc and All American Pet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| All American vs. International Consolidated Companies | All American vs. Frontera Group | All American vs. XCPCNL Business Services | All American vs. Aramark Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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