Correlation Between Torm PLC and Under Armour
Can any of the company-specific risk be diversified away by investing in both Torm PLC and Under Armour 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 Torm PLC and Under Armour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torm PLC Class and Under Armour C, you can compare the effects of market volatilities on Torm PLC and Under Armour 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 Torm PLC with a short position of Under Armour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and Under Armour.
Diversification Opportunities for Torm PLC and Under Armour
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Torm and Under is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C and Torm PLC 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 Torm PLC Class are associated (or correlated) with Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of Torm PLC i.e., Torm PLC and Under Armour go up and down completely randomly.
Pair Corralation between Torm PLC and Under Armour
Given the investment horizon of 90 days Torm PLC Class is expected to under-perform the Under Armour. But the stock apears to be less risky and, when comparing its historical volatility, Torm PLC Class is 2.35 times less risky than Under Armour. The stock trades about -0.41 of its potential returns per unit of risk. The Under Armour C is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 806.00 in Under Armour C on August 28, 2024 and sell it today you would earn a total of 85.00 from holding Under Armour C or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Torm PLC Class vs. Under Armour C
Performance |
| Timeline |
| Torm PLC Class |
| Under Armour C |
Torm PLC and Under Armour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torm PLC and Under Armour
The main advantage of trading using opposite Torm PLC and Under Armour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torm PLC position performs unexpectedly, Under Armour 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 Under Armour will offset losses from the drop in Under Armour's long position.The idea behind Torm PLC Class and Under Armour C 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Columbia Sportswear | Under Armour vs. Hanesbrands | Under Armour vs. PVH Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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