Correlation Between AB Volvo and AmeraMex International
Can any of the company-specific risk be diversified away by investing in both AB Volvo and AmeraMex International 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 AB Volvo and AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and AmeraMex International, you can compare the effects of market volatilities on AB Volvo and AmeraMex International 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 AB Volvo with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and AmeraMex International.
Diversification Opportunities for AB Volvo and AmeraMex International
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between VOLAF and AmeraMex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and AB Volvo 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 AB Volvo are associated (or correlated) with AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of AB Volvo i.e., AB Volvo and AmeraMex International go up and down completely randomly.
Pair Corralation between AB Volvo and AmeraMex International
Assuming the 90 days horizon AB Volvo is expected to generate 2.81 times less return on investment than AmeraMex International. But when comparing it to its historical volatility, AB Volvo is 4.98 times less risky than AmeraMex International. It trades about 0.05 of its potential returns per unit of risk. AmeraMex International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 52.00 in AmeraMex International on August 31, 2024 and sell it today you would lose (30.00) from holding AmeraMex International or give up 57.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.07% |
| Values | Daily Returns |
AB Volvo vs. AmeraMex International
Performance |
| Timeline |
| AB Volvo |
| AmeraMex International |
AB Volvo and AmeraMex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and AmeraMex International
The main advantage of trading using opposite AB Volvo and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, AmeraMex International 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 AmeraMex International will offset losses from the drop in AmeraMex International's long position.| AB Volvo vs. American Premium Water | AB Volvo vs. AmeraMex International | AB Volvo vs. Arts Way Manufacturing Co | AB Volvo vs. Astec Industries |
| AmeraMex International vs. First Tractor | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. American Premium Water |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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