Correlation Between Fortune Brands and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and CompuGroup Medical 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 Fortune Brands and CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Brands Home and CompuGroup Medical AG, you can compare the effects of market volatilities on Fortune Brands and CompuGroup Medical 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 Fortune Brands with a short position of CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and CompuGroup Medical.
Diversification Opportunities for Fortune Brands and CompuGroup Medical
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fortune and CompuGroup is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and CompuGroup Medical AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical and Fortune Brands 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 Fortune Brands Home are associated (or correlated) with CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of Fortune Brands i.e., Fortune Brands and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Fortune Brands and CompuGroup Medical
Assuming the 90 days trading horizon Fortune Brands Home is expected to generate 0.85 times more return on investment than CompuGroup Medical. However, Fortune Brands Home is 1.17 times less risky than CompuGroup Medical. It trades about 0.06 of its potential returns per unit of risk. CompuGroup Medical AG is currently generating about -0.05 per unit of risk. If you would invest 5,125 in Fortune Brands Home on August 30, 2024 and sell it today you would earn a total of 2,704 from holding Fortune Brands Home or generate 52.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.86% |
| Values | Daily Returns |
Fortune Brands Home vs. CompuGroup Medical AG
Performance |
| Timeline |
| Fortune Brands Home |
| CompuGroup Medical |
Fortune Brands and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and CompuGroup Medical
The main advantage of trading using opposite Fortune Brands and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.| Fortune Brands vs. Lendinvest PLC | Fortune Brands vs. Neometals | Fortune Brands vs. Albion Technology General | Fortune Brands vs. Jupiter Fund Management |
| CompuGroup Medical vs. Lendinvest PLC | CompuGroup Medical vs. Neometals | CompuGroup Medical vs. Albion Technology General | CompuGroup Medical vs. Jupiter Fund Management |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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