Correlation Between Transcat and Pool
Can any of the company-specific risk be diversified away by investing in both Transcat and Pool 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 Pool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcat and Pool Corporation, you can compare the effects of market volatilities on Transcat and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcat and Pool.
Diversification Opportunities for Transcat and Pool
Very weak diversification
The 3 months correlation between Transcat and Pool is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Transcat and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Transcat i.e., Transcat and Pool go up and down completely randomly.
Pair Corralation between Transcat and Pool
Given the investment horizon of 90 days Transcat is expected to under-perform the Pool. In addition to that, Transcat is 4.04 times more volatile than Pool Corporation. It trades about -0.14 of its total potential returns per unit of risk. Pool Corporation is currently generating about -0.12 per unit of volatility. If you would invest 36,003 in Pool Corporation on November 28, 2024 and sell it today you would lose (1,131) from holding Pool Corporation or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transcat vs. Pool Corp.
Performance |
| Timeline |
| Transcat |
| Pool |
Transcat and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcat and Pool
The main advantage of trading using opposite Transcat and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcat position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's long position.| Transcat vs. BlueLinx Holdings | Transcat vs. SiteOne Landscape Supply | Transcat vs. DXP Enterprises | Transcat vs. Core Main |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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