Correlation Between Alamo and Gencor Industries
Can any of the company-specific risk be diversified away by investing in both Alamo and Gencor Industries 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 Alamo and Gencor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Gencor Industries, you can compare the effects of market volatilities on Alamo and Gencor Industries 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 Alamo with a short position of Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Gencor Industries.
Diversification Opportunities for Alamo and Gencor Industries
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alamo and Gencor is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries and Alamo 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 Alamo Group are associated (or correlated) with Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of Alamo i.e., Alamo and Gencor Industries go up and down completely randomly.
Pair Corralation between Alamo and Gencor Industries
Considering the 90-day investment horizon Alamo Group is expected to under-perform the Gencor Industries. In addition to that, Alamo is 1.44 times more volatile than Gencor Industries. It trades about -0.1 of its total potential returns per unit of risk. Gencor Industries is currently generating about 0.15 per unit of volatility. If you would invest 1,616 in Gencor Industries on January 25, 2024 and sell it today you would earn a total of 75.00 from holding Gencor Industries or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. Gencor Industries
Performance |
| Timeline |
| Alamo Group |
| Gencor Industries |
Alamo and Gencor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Gencor Industries
The main advantage of trading using opposite Alamo and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Gencor Industries 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.The idea behind Alamo Group and Gencor Industries 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.| Gencor Industries vs. Thayer Ventures Acquisition | Gencor Industries vs. Aquagold International | Gencor Industries vs. Morningstar Unconstrained Allocation | Gencor Industries vs. Thrivent High Yield |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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