Correlation Between Amada and CSW Industrials
Can any of the company-specific risk be diversified away by investing in both Amada and CSW Industrials 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 Amada and CSW Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amada Co and CSW Industrials, you can compare the effects of market volatilities on Amada and CSW Industrials 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 Amada with a short position of CSW Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amada and CSW Industrials.
Diversification Opportunities for Amada and CSW Industrials
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amada and CSW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amada Co and CSW Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSW Industrials and Amada 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 Amada Co are associated (or correlated) with CSW Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSW Industrials has no effect on the direction of Amada i.e., Amada and CSW Industrials go up and down completely randomly.
Pair Corralation between Amada and CSW Industrials
If you would invest (100.00) in Amada Co on January 20, 2024 and sell it today you would earn a total of 100.00 from holding Amada Co or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amada Co vs. CSW Industrials
Performance |
| Timeline |
| Amada |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CSW Industrials |
Amada and CSW Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amada and CSW Industrials
The main advantage of trading using opposite Amada and CSW Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amada position performs unexpectedly, CSW Industrials 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 CSW Industrials will offset losses from the drop in CSW Industrials' long position.The idea behind Amada Co and CSW Industrials 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.| CSW Industrials vs. Dover | CSW Industrials vs. Illinois Tool Works | CSW Industrials vs. Xylem Inc | CSW Industrials vs. Franklin Electric Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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