Correlation Between All American and Deluxe

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

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

Diversification Opportunities for All American and Deluxe

0.0

Correlation Coefficient

All American  Deluxe

Pay attention - limited upside

The 3 months correlation between All and Deluxe is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe and All American 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 All American Pet are associated (or correlated) with Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of All American i.e., All American and Deluxe go up and down completely randomly.

Pair Corralation between All American and Deluxe

Given the investment horizon of 90 days All American Pet is expected to under-perform the Deluxe. In addition to that, All American is 5.29 times more volatile than Deluxe. It trades about -0.12 of its total potential returns per unit of risk. Deluxe is currently generating about 0.1 per unit of volatility. If you would invest  1,924  in Deluxe on September 24, 2024 and sell it today you would earn a total of  284.00  from holding Deluxe or generate 14.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

All American Pet  vs.  Deluxe

All American Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Deluxe

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with All American and Deluxe

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

The idea behind All American Pet and Deluxe 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.