Correlation Between Fortune Brands and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Aston Martin 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 Aston Martin 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 Aston Martin Lagonda, you can compare the effects of market volatilities on Fortune Brands and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Aston Martin.
Diversification Opportunities for Fortune Brands and Aston Martin
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortune and Aston is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Fortune Brands i.e., Fortune Brands and Aston Martin go up and down completely randomly.
Pair Corralation between Fortune Brands and Aston Martin
Assuming the 90 days trading horizon Fortune Brands Home is expected to generate 0.63 times more return on investment than Aston Martin. However, Fortune Brands Home is 1.58 times less risky than Aston Martin. It trades about 0.05 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about 0.0 per unit of risk. If you would invest 5,488 in Fortune Brands Home on September 14, 2024 and sell it today you would earn a total of 2,295 from holding Fortune Brands Home or generate 41.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.86% |
| Values | Daily Returns |
Fortune Brands Home vs. Aston Martin Lagonda
Performance |
| Timeline |
| Fortune Brands Home |
| Aston Martin Lagonda |
Fortune Brands and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Aston Martin
The main advantage of trading using opposite Fortune Brands and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Fortune Brands vs. STMicroelectronics NV | Fortune Brands vs. Aeorema Communications Plc | Fortune Brands vs. Charter Communications Cl | Fortune Brands vs. Air Products Chemicals |
| Aston Martin vs. Federal Realty Investment | Aston Martin vs. Fortune Brands Home | Aston Martin vs. Lowland Investment Co | Aston Martin vs. Bankers Investment Trust |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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