Correlation Between Timken and Corsair Gaming
Can any of the company-specific risk be diversified away by investing in both Timken and Corsair Gaming 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 Timken and Corsair Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timken Company and Corsair Gaming, you can compare the effects of market volatilities on Timken and Corsair Gaming 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 Timken with a short position of Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Corsair Gaming.
Diversification Opportunities for Timken and Corsair Gaming
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Timken and Corsair is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming and Timken 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 Timken Company are associated (or correlated) with Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Timken i.e., Timken and Corsair Gaming go up and down completely randomly.
Pair Corralation between Timken and Corsair Gaming
Considering the 90-day investment horizon Timken is expected to generate 33.45 times less return on investment than Corsair Gaming. But when comparing it to its historical volatility, Timken Company is 1.34 times less risky than Corsair Gaming. It trades about 0.01 of its potential returns per unit of risk. Corsair Gaming is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 583.00 in Corsair Gaming on September 12, 2024 and sell it today you would earn a total of 188.00 from holding Corsair Gaming or generate 32.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timken Company vs. Corsair Gaming
Performance |
| Timeline |
| Timken Company |
| Corsair Gaming |
Timken and Corsair Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Corsair Gaming
The main advantage of trading using opposite Timken and Corsair Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken position performs unexpectedly, Corsair Gaming 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 Corsair Gaming will offset losses from the drop in Corsair Gaming's long position.The idea behind Timken Company and Corsair Gaming 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.| Corsair Gaming vs. Clover Health Investments | Corsair Gaming vs. Skillz Platform | Corsair Gaming vs. Fubotv Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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