Correlation Between Xinjiang Goldwind and Cummins
Can any of the company-specific risk be diversified away by investing in both Xinjiang Goldwind and Cummins 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 Xinjiang Goldwind and Cummins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinjiang Goldwind Science and Cummins, you can compare the effects of market volatilities on Xinjiang Goldwind and Cummins 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 Xinjiang Goldwind with a short position of Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Goldwind and Cummins.
Diversification Opportunities for Xinjiang Goldwind and Cummins
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinjiang and Cummins is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Goldwind Science and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins and Xinjiang Goldwind 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 Xinjiang Goldwind Science are associated (or correlated) with Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Xinjiang Goldwind i.e., Xinjiang Goldwind and Cummins go up and down completely randomly.
Pair Corralation between Xinjiang Goldwind and Cummins
Assuming the 90 days horizon Xinjiang Goldwind Science is expected to under-perform the Cummins. In addition to that, Xinjiang Goldwind is 1.08 times more volatile than Cummins. It trades about -0.08 of its total potential returns per unit of risk. Cummins is currently generating about 0.26 per unit of volatility. If you would invest 33,020 in Cummins on August 31, 2024 and sell it today you would earn a total of 4,083 from holding Cummins or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinjiang Goldwind Science vs. Cummins
Performance |
| Timeline |
| Xinjiang Goldwind Science |
| Cummins |
Xinjiang Goldwind and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinjiang Goldwind and Cummins
The main advantage of trading using opposite Xinjiang Goldwind and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Goldwind position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| Xinjiang Goldwind vs. GE Aerospace | Xinjiang Goldwind vs. Eaton PLC | Xinjiang Goldwind vs. Siemens AG Class | Xinjiang Goldwind vs. Schneider Electric SA |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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