Correlation Between Track and Trans Lux
Can any of the company-specific risk be diversified away by investing in both Track and Trans Lux 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 Track and Trans Lux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Track Group and Trans Lux Cp, you can compare the effects of market volatilities on Track and Trans Lux 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 Track with a short position of Trans Lux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Track and Trans Lux.
Diversification Opportunities for Track and Trans Lux
Poor diversification
The 3 months correlation between Track and Trans is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Track Group and Trans Lux Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Lux Cp and Track 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 Track Group are associated (or correlated) with Trans Lux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Lux Cp has no effect on the direction of Track i.e., Track and Trans Lux go up and down completely randomly.
Pair Corralation between Track and Trans Lux
If you would invest 21.00 in Track Group on September 2, 2024 and sell it today you would lose (6.00) from holding Track Group or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Track Group vs. Trans Lux Cp
Performance |
| Timeline |
| Track Group |
| Trans Lux Cp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Track and Trans Lux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Track and Trans Lux
The main advantage of trading using opposite Track and Trans Lux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Track position performs unexpectedly, Trans Lux 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 Trans Lux will offset losses from the drop in Trans Lux's long position.The idea behind Track Group and Trans Lux Cp 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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