Correlation Between Chicago Rivet and AMCON Distributing

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

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

Diversification Opportunities for Chicago Rivet and AMCON Distributing

-0.58

Correlation Coefficient

Chicago Rivet  AMCON Distributing

Excellent diversification

The 3 months correlation between Chicago and AMCON is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chicago Rivet Machine and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing and Chicago Rivet 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 Chicago Rivet Machine are associated (or correlated) with AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Chicago Rivet i.e., Chicago Rivet and AMCON Distributing go up and down completely randomly.

Pair Corralation between Chicago Rivet and AMCON Distributing

Considering the 90-day investment horizon Chicago Rivet Machine is expected to generate 0.95 times more return on investment than AMCON Distributing. However, Chicago Rivet Machine is 1.05 times less risky than AMCON Distributing. It trades about 0.1 of its potential returns per unit of risk. AMCON Distributing is currently generating about -0.14 per unit of risk. If you would invest  1,569  in Chicago Rivet Machine on February 21, 2024 and sell it today you would earn a total of  81.00  from holding Chicago Rivet Machine or generate 5.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Chicago Rivet Machine  vs.  AMCON Distributing

Chicago Rivet Machine

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chicago Rivet Machine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Chicago Rivet may actually be approaching a critical reversion point that can send shares even higher in June 2024.

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Chicago Rivet and AMCON Distributing

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

The idea behind Chicago Rivet Machine and AMCON Distributing 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.