Correlation Between TARGET and Custom Truck

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

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

Diversification Opportunities for TARGET and Custom Truck

-0.26

Correlation Coefficient

TARGET  Custom Truck

Very good diversification

The 3 months correlation between TARGET and Custom is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding TARGET PORATION and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and TARGET 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 TARGET PORATION are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of TARGET i.e., TARGET and Custom Truck go up and down completely randomly.

Pair Corralation between TARGET and Custom Truck

Assuming the 90 days trading horizon TARGET PORATION is expected to under-perform the Custom Truck. But the bond apears to be less risky and, when comparing its historical volatility, TARGET PORATION is 2.59 times less risky than Custom Truck. The bond trades about -0.1 of its potential returns per unit of risk. The Custom Truck One is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  472.00  in Custom Truck One on May 16, 2025 and sell it today you would earn a total of  121.00  from holding Custom Truck One or generate 25.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TARGET PORATION  vs.  Custom Truck One

TARGET PORATION

Risk-Adjusted Performance

Weakest

Over the last 90 days TARGET PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for TARGET PORATION investors.

Custom Truck One

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Custom Truck unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TARGET and Custom Truck

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

The idea behind TARGET PORATION and Custom Truck One 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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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.