Correlation Between Cornerstone Strategic and Array Technologies
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and Array Technologies 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 Cornerstone Strategic and Array Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Value and Array Technologies, you can compare the effects of market volatilities on Cornerstone Strategic and Array Technologies 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 Cornerstone Strategic with a short position of Array Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Array Technologies.
Diversification Opportunities for Cornerstone Strategic and Array Technologies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cornerstone and Array is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Array Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Array Technologies and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with Array Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Array Technologies has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Array Technologies go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Array Technologies
Considering the 90-day investment horizon Cornerstone Strategic is expected to generate 1.77 times less return on investment than Array Technologies. But when comparing it to its historical volatility, Cornerstone Strategic Value is 6.58 times less risky than Array Technologies. It trades about 0.37 of its potential returns per unit of risk. Array Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 529.00 in Array Technologies on April 28, 2025 and sell it today you would earn a total of 162.00 from holding Array Technologies or generate 30.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cornerstone Strategic Value vs. Array Technologies
Performance |
Timeline |
Cornerstone Strategic |
Array Technologies |
Cornerstone Strategic and Array Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cornerstone Strategic and Array Technologies
The main advantage of trading using opposite Cornerstone Strategic and Array Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, Array Technologies 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 Array Technologies will offset losses from the drop in Array Technologies' long position.The idea behind Cornerstone Strategic Value and Array Technologies 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.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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