Correlation Between Temple Bar and Roper Technologies
Can any of the company-specific risk be diversified away by investing in both Temple Bar and Roper Technologies 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 Temple Bar and Roper Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Temple Bar Investment and Roper Technologies, you can compare the effects of market volatilities on Temple Bar and Roper Technologies 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 Temple Bar with a short position of Roper Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Temple Bar and Roper Technologies.
Diversification Opportunities for Temple Bar and Roper Technologies
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Temple and Roper is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Temple Bar Investment and Roper Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies and Temple Bar 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 Temple Bar Investment are associated (or correlated) with Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies has no effect on the direction of Temple Bar i.e., Temple Bar and Roper Technologies go up and down completely randomly.
Pair Corralation between Temple Bar and Roper Technologies
Assuming the 90 days trading horizon Temple Bar is expected to generate 4.12 times less return on investment than Roper Technologies. But when comparing it to its historical volatility, Temple Bar Investment is 1.51 times less risky than Roper Technologies. It trades about 0.14 of its potential returns per unit of risk. Roper Technologies is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 51,310 in Roper Technologies on November 3, 2024 and sell it today you would earn a total of 6,128 from holding Roper Technologies or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Temple Bar Investment vs. Roper Technologies
Performance |
| Timeline |
| Temple Bar Investment |
| Roper Technologies |
Temple Bar and Roper Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Temple Bar and Roper Technologies
The main advantage of trading using opposite Temple Bar and Roper Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Temple Bar position performs unexpectedly, Roper Technologies 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 Roper Technologies will offset losses from the drop in Roper Technologies' long position.| Temple Bar vs. First Class Metals | Temple Bar vs. Software Circle plc | Temple Bar vs. Alien Metals | Temple Bar vs. Monster Beverage Corp |
| Roper Technologies vs. Endeavour Mining Corp | Roper Technologies vs. Lundin Mining Corp | Roper Technologies vs. Odfjell Drilling | Roper Technologies vs. GoldMining |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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