Correlation Between Semiconductor Bear and Continental

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Can any of the company-specific risk be diversified away by investing in both Semiconductor Bear and Continental 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 Semiconductor Bear and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semiconductor Bear 3X and Caleres, you can compare the effects of market volatilities on Semiconductor Bear and Continental 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 Semiconductor Bear with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Bear and Continental.

Diversification Opportunities for Semiconductor Bear and Continental

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Semiconductor and Continental is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Bear 3X and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Semiconductor Bear 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 Semiconductor Bear 3X are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Semiconductor Bear i.e., Semiconductor Bear and Continental go up and down completely randomly.

Pair Corralation between Semiconductor Bear and Continental

Given the investment horizon of 90 days Semiconductor Bear 3X is expected to generate 1.97 times more return on investment than Continental. However, Semiconductor Bear is 1.97 times more volatile than Caleres. It trades about 0.02 of its potential returns per unit of risk. Caleres is currently generating about 0.04 per unit of risk. If you would invest  7,290  in Semiconductor Bear 3X on July 7, 2022 and sell it today you would lose (2,018)  from holding Semiconductor Bear 3X or give up 27.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Semiconductor Bear 3X  vs.  Caleres

 Performance (%) 
       Timeline  
Semiconductor Bear 
Semiconductor Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Bear 3X are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Semiconductor Bear may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Semiconductor Price Channel

Continental 
Continental Performance
0 of 100
Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Continental is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Continental Price Channel

Semiconductor Bear and Continental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Semiconductor Bear and Continental

The main advantage of trading using opposite Semiconductor Bear and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Bear position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.
Semiconductor Bear vs. Walt Disney
The idea behind Semiconductor Bear 3X and Caleres 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.
Continental vs. Amazon Inc
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 CEO Directory module to screen CEOs from public companies around the world.

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