Correlation Between Timbercreek Financial and Atlas Engineered

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

By analyzing existing cross correlation between Timbercreek Financial Corp and Atlas Engineered Products, you can compare the effects of market volatilities on Timbercreek Financial and Atlas Engineered 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 Timbercreek Financial with a short position of Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timbercreek Financial and Atlas Engineered.

Diversification Opportunities for Timbercreek Financial and Atlas Engineered

0.74

Correlation Coefficient

Timbercreek Financial  Atlas Engineered

Poor diversification

The 3 months correlation between Timbercreek and Atlas is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Timbercreek Financial Corp and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products and Timbercreek Financial 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 Timbercreek Financial Corp are associated (or correlated) with Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of Timbercreek Financial i.e., Timbercreek Financial and Atlas Engineered go up and down completely randomly.

Pair Corralation between Timbercreek Financial and Atlas Engineered

Assuming the 90 days horizon Timbercreek Financial Corp is expected to generate 0.21 times more return on investment than Atlas Engineered. However, Timbercreek Financial Corp is 4.72 times less risky than Atlas Engineered. It trades about -0.26 of its potential returns per unit of risk. Atlas Engineered Products is currently generating about -0.13 per unit of risk. If you would invest  768.00  in Timbercreek Financial Corp on September 12, 2024 and sell it today you would lose (31.00) from holding Timbercreek Financial Corp or give up 4.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Timbercreek Financial Corp  vs.  Atlas Engineered Products

Timbercreek Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timbercreek Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Atlas Engineered Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Engineered Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Timbercreek Financial and Atlas Engineered

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

The idea behind Timbercreek Financial Corp and Atlas Engineered Products 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..