Correlation Between Stellar and GREENFIRST FORPRODINC
Can any of the company-specific risk be diversified away by investing in both Stellar and GREENFIRST FORPRODINC 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 Stellar and GREENFIRST FORPRODINC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and GREENFIRST FORPRODINC, you can compare the effects of market volatilities on Stellar and GREENFIRST FORPRODINC 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 Stellar with a short position of GREENFIRST FORPRODINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and GREENFIRST FORPRODINC.
Diversification Opportunities for Stellar and GREENFIRST FORPRODINC
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stellar and GREENFIRST is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and GREENFIRST FORPRODINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENFIRST FORPRODINC and Stellar 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 Stellar are associated (or correlated) with GREENFIRST FORPRODINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENFIRST FORPRODINC has no effect on the direction of Stellar i.e., Stellar and GREENFIRST FORPRODINC go up and down completely randomly.
Pair Corralation between Stellar and GREENFIRST FORPRODINC
Assuming the 90 days trading horizon Stellar is expected to generate 1.17 times more return on investment than GREENFIRST FORPRODINC. However, Stellar is 1.17 times more volatile than GREENFIRST FORPRODINC. It trades about 0.1 of its potential returns per unit of risk. GREENFIRST FORPRODINC is currently generating about 0.0 per unit of risk. If you would invest 9.05 in Stellar on October 13, 2024 and sell it today you would earn a total of 31.95 from holding Stellar or generate 353.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.94% |
| Values | Daily Returns |
Stellar vs. GREENFIRST FORPRODINC
Performance |
| Timeline |
| Stellar |
| GREENFIRST FORPRODINC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Stellar and GREENFIRST FORPRODINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and GREENFIRST FORPRODINC
The main advantage of trading using opposite Stellar and GREENFIRST FORPRODINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, GREENFIRST FORPRODINC 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 GREENFIRST FORPRODINC will offset losses from the drop in GREENFIRST FORPRODINC's long position.The idea behind Stellar and GREENFIRST FORPRODINC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GREENFIRST FORPRODINC vs. Apple Inc | GREENFIRST FORPRODINC vs. Apple Inc | GREENFIRST FORPRODINC vs. Apple Inc | GREENFIRST FORPRODINC vs. Apple Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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