Correlation Between Transcat and Core Main
Can any of the company-specific risk be diversified away by investing in both Transcat and Core Main 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 Transcat and Core Main into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcat and Core Main, you can compare the effects of market volatilities on Transcat and Core Main 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 Transcat with a short position of Core Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcat and Core Main.
Diversification Opportunities for Transcat and Core Main
Pay attention - limited upside
The 3 months correlation between Transcat and Core is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Transcat and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main and Transcat 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 Transcat are associated (or correlated) with Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of Transcat i.e., Transcat and Core Main go up and down completely randomly.
Pair Corralation between Transcat and Core Main
Given the investment horizon of 90 days Transcat is expected to generate 1.16 times more return on investment than Core Main. However, Transcat is 1.16 times more volatile than Core Main. It trades about 0.1 of its potential returns per unit of risk. Core Main is currently generating about 0.09 per unit of risk. If you would invest 9,945 in Transcat on August 30, 2024 and sell it today you would earn a total of 559.00 from holding Transcat or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcat vs. Core Main
Performance |
| Timeline |
| Transcat |
| Core Main |
Transcat and Core Main Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcat and Core Main
The main advantage of trading using opposite Transcat and Core Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcat position performs unexpectedly, Core Main 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 Core Main will offset losses from the drop in Core Main's long position.| Transcat vs. BlueLinx Holdings | Transcat vs. SiteOne Landscape Supply | Transcat vs. DXP Enterprises | Transcat vs. Core Main |
| Core Main vs. DXP Enterprises | Core Main vs. Watsco Inc | Core Main vs. Distribution Solutions Group | Core Main vs. SiteOne Landscape Supply |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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