Correlation Between Young Cos and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both Young Cos and Aberforth Smaller 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 Young Cos and Aberforth Smaller into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and Aberforth Smaller Companies, you can compare the effects of market volatilities on Young Cos and Aberforth Smaller 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 Young Cos with a short position of Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and Aberforth Smaller.
Diversification Opportunities for Young Cos and Aberforth Smaller
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Young and Aberforth is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller and Young Cos 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 Young Cos Brewery are associated (or correlated) with Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of Young Cos i.e., Young Cos and Aberforth Smaller go up and down completely randomly.
Pair Corralation between Young Cos and Aberforth Smaller
Assuming the 90 days trading horizon Young Cos Brewery is expected to under-perform the Aberforth Smaller. In addition to that, Young Cos is 1.5 times more volatile than Aberforth Smaller Companies. It trades about -0.2 of its total potential returns per unit of risk. Aberforth Smaller Companies is currently generating about -0.08 per unit of volatility. If you would invest 148,000 in Aberforth Smaller Companies on November 5, 2024 and sell it today you would lose (3,200) from holding Aberforth Smaller Companies or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. Aberforth Smaller Companies
Performance |
| Timeline |
| Young Cos Brewery |
| Aberforth Smaller |
Young Cos and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and Aberforth Smaller
The main advantage of trading using opposite Young Cos and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.| Young Cos vs. Mobius Investment Trust | Young Cos vs. Monks Investment Trust | Young Cos vs. New Residential Investment | Young Cos vs. Gear4music Plc |
| Aberforth Smaller vs. Travel Leisure Co | Aberforth Smaller vs. Polar Capital Technology | Aberforth Smaller vs. TechnipFMC PLC | Aberforth Smaller vs. Xeros Technology Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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