Correlation Between HE Equipment and Global Power
Can any of the company-specific risk be diversified away by investing in both HE Equipment and Global Power 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 HE Equipment and Global Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Global Power Equipment, you can compare the effects of market volatilities on HE Equipment and Global Power 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 HE Equipment with a short position of Global Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Global Power.
Diversification Opportunities for HE Equipment and Global Power
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HEES and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Global Power Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Power Equipment and HE Equipment 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 HE Equipment Services are associated (or correlated) with Global Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Power Equipment has no effect on the direction of HE Equipment i.e., HE Equipment and Global Power go up and down completely randomly.
Pair Corralation between HE Equipment and Global Power
If you would invest (100.00) in Global Power Equipment on January 26, 2024 and sell it today you would earn a total of 100.00 from holding Global Power Equipment or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
HE Equipment Services vs. Global Power Equipment
Performance |
| Timeline |
| HE Equipment Services |
| Global Power Equipment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HE Equipment and Global Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Global Power
The main advantage of trading using opposite HE Equipment and Global Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Global Power 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 Global Power will offset losses from the drop in Global Power's long position.| HE Equipment vs. Ryder System | HE Equipment vs. The Aarons | HE Equipment vs. Alta Equipment Group | HE Equipment vs. GATX Corporation |
| Global Power vs. Dow Inc | Global Power vs. The Mosaic | Global Power vs. Hawkins | Global Power vs. Skechers USA |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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