Correlation Between Select Sector and DINE SAB
Can any of the company-specific risk be diversified away by investing in both Select Sector and DINE SAB 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 Select Sector and DINE SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and DINE SAB de, you can compare the effects of market volatilities on Select Sector and DINE SAB 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 Select Sector with a short position of DINE SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and DINE SAB.
Diversification Opportunities for Select Sector and DINE SAB
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Select and DINE is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector and DINE SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DINE SAB de and Select Sector 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 The Select Sector are associated (or correlated) with DINE SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DINE SAB de has no effect on the direction of Select Sector i.e., Select Sector and DINE SAB go up and down completely randomly.
Pair Corralation between Select Sector and DINE SAB
Assuming the 90 days trading horizon The Select Sector is expected to generate 0.39 times more return on investment than DINE SAB. However, The Select Sector is 2.54 times less risky than DINE SAB. It trades about 0.17 of its potential returns per unit of risk. DINE SAB de is currently generating about -0.02 per unit of risk. If you would invest 159,900 in The Select Sector on August 30, 2024 and sell it today you would earn a total of 10,700 from holding The Select Sector or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Select Sector vs. DINE SAB de
Performance |
| Timeline |
| Select Sector |
| DINE SAB de |
Select Sector and DINE SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and DINE SAB
The main advantage of trading using opposite Select Sector and DINE SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector position performs unexpectedly, DINE SAB 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 DINE SAB will offset losses from the drop in DINE SAB's long position.| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
| DINE SAB vs. UnitedHealth Group Incorporated | DINE SAB vs. Lockheed Martin | DINE SAB vs. The Select Sector | DINE SAB vs. SPDR Series Trust |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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