Correlation Between Northwest Pipe and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Northwest Pipe and Thyssenkrupp 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 Northwest Pipe and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Pipe and Thyssenkrupp AG ON, you can compare the effects of market volatilities on Northwest Pipe and Thyssenkrupp 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 Northwest Pipe with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Pipe and Thyssenkrupp.
Diversification Opportunities for Northwest Pipe and Thyssenkrupp
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Northwest and Thyssenkrupp is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Pipe and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON and Northwest Pipe 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 Northwest Pipe are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ON has no effect on the direction of Northwest Pipe i.e., Northwest Pipe and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Northwest Pipe and Thyssenkrupp
Given the investment horizon of 90 days Northwest Pipe is expected to generate 1.63 times less return on investment than Thyssenkrupp. But when comparing it to its historical volatility, Northwest Pipe is 2.07 times less risky than Thyssenkrupp. It trades about 0.09 of its potential returns per unit of risk. Thyssenkrupp AG ON is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 365.00 in Thyssenkrupp AG ON on September 24, 2024 and sell it today you would earn a total of 60.00 from holding Thyssenkrupp AG ON or generate 16.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
Northwest Pipe vs. Thyssenkrupp AG ON
Performance |
Timeline |
Northwest Pipe |
Thyssenkrupp AG ON |
Northwest Pipe and Thyssenkrupp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Northwest Pipe and Thyssenkrupp
The main advantage of trading using opposite Northwest Pipe and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Pipe position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.Northwest Pipe vs. Insteel Industries | Northwest Pipe vs. Carpenter Technology | Northwest Pipe vs. ESAB Corp | Northwest Pipe vs. Gulf Island Fabrication |
Thyssenkrupp vs. ESAB Corp | Thyssenkrupp vs. Worthington Industries | Thyssenkrupp vs. Allegheny Technologies Incorporated | Thyssenkrupp vs. Insteel Industries |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |