Correlation Between United States and C Mer
Can any of the company-specific risk be diversified away by investing in both United States and C Mer 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 United States and C Mer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and C Mer Industries, you can compare the effects of market volatilities on United States and C Mer 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 United States with a short position of C Mer. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and C Mer.
Diversification Opportunities for United States and C Mer
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and CMER is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and C Mer Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Mer Industries and United States 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 United States Steel are associated (or correlated) with C Mer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Mer Industries has no effect on the direction of United States i.e., United States and C Mer go up and down completely randomly.
Pair Corralation between United States and C Mer
Taking into account the 90-day investment horizon United States is expected to generate 4.71 times less return on investment than C Mer. But when comparing it to its historical volatility, United States Steel is 1.71 times less risky than C Mer. It trades about 0.05 of its potential returns per unit of risk. C Mer Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 67,000 in C Mer Industries on January 25, 2024 and sell it today you would earn a total of 47,800 from holding C Mer Industries or generate 71.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.15% |
| Values | Daily Returns |
United States Steel vs. C Mer Industries
Performance |
| Timeline |
| United States Steel |
| C Mer Industries |
United States and C Mer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and C Mer
The main advantage of trading using opposite United States and C Mer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, C Mer 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 C Mer will offset losses from the drop in C Mer's long position.The idea behind United States Steel and C Mer 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.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 CEOs Directory module to screen CEOs from public companies around the world.
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