Correlation Between Superior Uniform and American Outdoor

Can any of the company-specific risk be diversified away by investing in both Superior Uniform and American Outdoor 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 Superior Uniform and American Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Uniform Group and American Outdoor Brands, you can compare the effects of market volatilities on Superior Uniform and American Outdoor 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 Superior Uniform with a short position of American Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Uniform and American Outdoor.

Diversification Opportunities for Superior Uniform and American Outdoor

0.19

Correlation Coefficient

Superior Uniform American Outdoor

Average diversification

The 3 months correlation between Superior and American is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Superior Uniform Group and American Outdoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Outdoor Brands and Superior Uniform 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 Superior Uniform Group are associated (or correlated) with American Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Outdoor Brands has no effect on the direction of Superior Uniform i.e., Superior Uniform and American Outdoor go up and down completely randomly.

Pair Corralation between Superior Uniform and American Outdoor

Considering the 90-day investment horizon Superior Uniform Group is expected to generate 1.29 times more return on investment than American Outdoor. However, Superior Uniform is 1.29 times more volatile than American Outdoor Brands. It trades about 0.23 of its potential returns per unit of risk. American Outdoor Brands is currently generating about -0.15 per unit of risk. If you would invest  748.00  in Superior Uniform Group on March 7, 2023 and sell it today you would earn a total of  122.00  from holding Superior Uniform Group or generate 16.31% return on investment over 90 days.

Superior Uniform Group  vs.  American Outdoor Brands

Superior Uniform

Superior Performance

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Over the last 90 days Superior Uniform Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in July 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

American Outdoor Brands

American Performance

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Over the last 90 days American Outdoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Superior Uniform and American Outdoor

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

The idea behind Superior Uniform Group and American Outdoor Brands 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.