Correlation Between Crocs and Boralex
Can any of the company-specific risk be diversified away by investing in both Crocs and Boralex 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 Crocs and Boralex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crocs Inc and Boralex, you can compare the effects of market volatilities on Crocs and Boralex 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 Crocs with a short position of Boralex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crocs and Boralex.
Diversification Opportunities for Crocs and Boralex
Pay attention - limited upside
The 3 months correlation between Crocs and Boralex is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and Crocs 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 Crocs Inc are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Crocs i.e., Crocs and Boralex go up and down completely randomly.
Pair Corralation between Crocs and Boralex
Given the investment horizon of 90 days Crocs Inc is expected to under-perform the Boralex. In addition to that, Crocs is 1.38 times more volatile than Boralex. It trades about -0.29 of its total potential returns per unit of risk. Boralex is currently generating about 0.0 per unit of volatility. If you would invest 1,980 in Boralex on January 23, 2024 and sell it today you would lose (5.00) from holding Boralex or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crocs Inc vs. Boralex
Performance |
| Timeline |
| Crocs Inc |
| Boralex |
Crocs and Boralex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crocs and Boralex
The main advantage of trading using opposite Crocs and Boralex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crocs position performs unexpectedly, Boralex 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 Boralex will offset losses from the drop in Boralex's long position.The idea behind Crocs Inc and Boralex 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.| Boralex vs. American Water Works | Boralex vs. Middlesex Water | Boralex vs. SJW Corporation | Boralex vs. California Water Service |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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