Correlation Between United States and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both United States and Graham Holdings 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 United States and Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Graham Holdings Co, you can compare the effects of market volatilities on United States and Graham Holdings 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 United States with a short position of Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Graham Holdings.
Diversification Opportunities for United States and Graham Holdings
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Graham is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and United States 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 United States Steel are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of United States i.e., United States and Graham Holdings go up and down completely randomly.
Pair Corralation between United States and Graham Holdings
Assuming the 90 days trading horizon United States Steel is expected to generate 2.9 times more return on investment than Graham Holdings. However, United States is 2.9 times more volatile than Graham Holdings Co. It trades about 0.15 of its potential returns per unit of risk. Graham Holdings Co is currently generating about -0.11 per unit of risk. If you would invest 3,153 in United States Steel on October 16, 2024 and sell it today you would earn a total of 313.00 from holding United States Steel or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Graham Holdings Co
Performance |
| Timeline |
| United States Steel |
| Graham Holdings |
United States and Graham Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Graham Holdings
The main advantage of trading using opposite United States and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.| United States vs. WillScot Mobile Mini | United States vs. United Breweries Co | United States vs. Thai Beverage Public | United States vs. THAI BEVERAGE |
| Graham Holdings vs. United States Steel | Graham Holdings vs. GALENA MINING LTD | Graham Holdings vs. The Japan Steel | Graham Holdings vs. TOMBADOR IRON LTD |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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