Correlation Between AB Traction and Pierce Group
Can any of the company-specific risk be diversified away by investing in both AB Traction and Pierce Group 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 AB Traction and Pierce Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Traction and Pierce Group AB, you can compare the effects of market volatilities on AB Traction and Pierce Group 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 AB Traction with a short position of Pierce Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Traction and Pierce Group.
Diversification Opportunities for AB Traction and Pierce Group
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRAC-B and Pierce is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AB Traction and Pierce Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pierce Group AB and AB Traction 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 AB Traction are associated (or correlated) with Pierce Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pierce Group AB has no effect on the direction of AB Traction i.e., AB Traction and Pierce Group go up and down completely randomly.
Pair Corralation between AB Traction and Pierce Group
Assuming the 90 days trading horizon AB Traction is expected to under-perform the Pierce Group. But the stock apears to be less risky and, when comparing its historical volatility, AB Traction is 2.39 times less risky than Pierce Group. The stock trades about -0.02 of its potential returns per unit of risk. The Pierce Group AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 844.00 in Pierce Group AB on August 29, 2024 and sell it today you would lose (20.00) from holding Pierce Group AB or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Traction vs. Pierce Group AB
Performance |
| Timeline |
| AB Traction |
| Pierce Group AB |
AB Traction and Pierce Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Traction and Pierce Group
The main advantage of trading using opposite AB Traction and Pierce Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Traction position performs unexpectedly, Pierce Group 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 Pierce Group will offset losses from the drop in Pierce Group's long position.| AB Traction vs. Svolder AB | AB Traction vs. Investment AB Oresund | AB Traction vs. L E Lundbergfretagen | AB Traction vs. Creades AB |
| Pierce Group vs. Rugvista Group AB | Pierce Group vs. Karnov Group AB | Pierce Group vs. Nordic Waterproofing Holding | Pierce Group vs. BHG Group AB |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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