Correlation Between 1st Prestige and Investor
Can any of the company-specific risk be diversified away by investing in both 1st Prestige and Investor 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 1st Prestige and Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Prestige Wealth and Investor AB, you can compare the effects of market volatilities on 1st Prestige and Investor 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 1st Prestige with a short position of Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Prestige and Investor.
Diversification Opportunities for 1st Prestige and Investor
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 1st and Investor is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding 1st Prestige Wealth and Investor AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB and 1st Prestige 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 1st Prestige Wealth are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB has no effect on the direction of 1st Prestige i.e., 1st Prestige and Investor go up and down completely randomly.
Pair Corralation between 1st Prestige and Investor
Given the investment horizon of 90 days 1st Prestige Wealth is expected to generate 1.55 times more return on investment than Investor. However, 1st Prestige is 1.55 times more volatile than Investor AB. It trades about 0.22 of its potential returns per unit of risk. Investor AB is currently generating about -0.29 per unit of risk. If you would invest 0.10 in 1st Prestige Wealth on February 6, 2024 and sell it today you would earn a total of 0.01 from holding 1st Prestige Wealth or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
1st Prestige Wealth vs. Investor AB
Performance |
| Timeline |
| 1st Prestige Wealth |
| Investor AB |
1st Prestige and Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Prestige and Investor
The main advantage of trading using opposite 1st Prestige and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Prestige position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.| 1st Prestige vs. Sun Life Financial | 1st Prestige vs. Arch Capital Group | 1st Prestige vs. Aegon NV ADR | 1st Prestige vs. Old Republic International |
| Investor vs. Blackhawk Growth Corp | Investor vs. Mount Logan Capital | Investor vs. Guardian Capital Group | Investor vs. Flow Capital Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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