Correlation Between Shimano and Carnival Plc
Can any of the company-specific risk be diversified away by investing in both Shimano and Carnival Plc 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 Shimano and Carnival Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shimano and Carnival Plc ADS, you can compare the effects of market volatilities on Shimano and Carnival Plc 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 Shimano with a short position of Carnival Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shimano and Carnival Plc.
Diversification Opportunities for Shimano and Carnival Plc
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shimano and Carnival is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Shimano and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS and Shimano 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 Shimano are associated (or correlated) with Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Shimano i.e., Shimano and Carnival Plc go up and down completely randomly.
Pair Corralation between Shimano and Carnival Plc
Assuming the 90 days horizon Shimano is expected to generate 1.03 times more return on investment than Carnival Plc. However, Shimano is 1.03 times more volatile than Carnival Plc ADS. It trades about 0.11 of its potential returns per unit of risk. Carnival Plc ADS is currently generating about -0.06 per unit of risk. If you would invest 14,547 in Shimano on February 6, 2024 and sell it today you would earn a total of 2,303 from holding Shimano or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shimano vs. Carnival Plc ADS
Performance |
| Timeline |
| Shimano |
| Carnival Plc ADS |
Shimano and Carnival Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shimano and Carnival Plc
The main advantage of trading using opposite Shimano and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shimano position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.The idea behind Shimano and Carnival Plc ADS 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.| Carnival Plc vs. Biglari Holdings | Carnival Plc vs. Smart Share Global | Carnival Plc vs. Sweetgreen | Carnival Plc vs. WW International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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