Correlation Between Charter Communications and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Flow Traders 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 Charter Communications and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Flow Traders NV, you can compare the effects of market volatilities on Charter Communications and Flow Traders 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 Charter Communications with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Flow Traders.
Diversification Opportunities for Charter Communications and Flow Traders
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Charter and Flow is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Charter Communications i.e., Charter Communications and Flow Traders go up and down completely randomly.
Pair Corralation between Charter Communications and Flow Traders
Assuming the 90 days trading horizon Charter Communications Cl is expected to under-perform the Flow Traders. But the stock apears to be less risky and, when comparing its historical volatility, Charter Communications Cl is 1.39 times less risky than Flow Traders. The stock trades about -0.35 of its potential returns per unit of risk. The Flow Traders NV is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,110 in Flow Traders NV on October 11, 2024 and sell it today you would earn a total of 203.00 from holding Flow Traders NV or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Charter Communications Cl vs. Flow Traders NV
Performance |
| Timeline |
| Charter Communications |
| Flow Traders NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Charter Communications and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Flow Traders
The main advantage of trading using opposite Charter Communications and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Charter Communications vs. Aptitude Software Group | Charter Communications vs. Morgan Advanced Materials | Charter Communications vs. GlobalData PLC | Charter Communications vs. Martin Marietta Materials |
| Flow Traders vs. UNIQA Insurance Group | Flow Traders vs. Ecclesiastical Insurance Office | Flow Traders vs. Centaur Media | Flow Traders vs. Vienna Insurance Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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