Correlation Between PLBT and DIA

Can any of the company-specific risk be diversified away by investing in both PLBT and DIA 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 PLBT and DIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLBT and DIA, you can compare the effects of market volatilities on PLBT and DIA 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 PLBT with a short position of DIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLBT and DIA.

Diversification Opportunities for PLBT and DIA

-0.19

Correlation Coefficient

PLBT  DIA

Good diversification

The 3 months correlation between PLBT and DIA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PLBT and DIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIA and PLBT 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 PLBT are associated (or correlated) with DIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIA has no effect on the direction of PLBT i.e., PLBT and DIA go up and down completely randomly.

Pair Corralation between PLBT and DIA

If you would invest  72.00  in DIA on September 18, 2024 and sell it today you would earn a total of  3.00  from holding DIA or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

PLBT  vs.  DIA

PLBT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLBT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, PLBT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DIA

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLBT and DIA

The main advantage of trading using opposite PLBT and DIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLBT position performs unexpectedly, DIA 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 DIA will offset losses from the drop in DIA's long position.

The idea behind PLBT and DIA 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.