Correlation Between Fortune Brands and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Bankers Investment 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 Bankers Investment 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 Bankers Investment Trust, you can compare the effects of market volatilities on Fortune Brands and Bankers Investment 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 Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Bankers Investment.
Diversification Opportunities for Fortune Brands and Bankers Investment
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fortune and Bankers is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust 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 Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Fortune Brands i.e., Fortune Brands and Bankers Investment go up and down completely randomly.
Pair Corralation between Fortune Brands and Bankers Investment
Assuming the 90 days trading horizon Fortune Brands Home is expected to under-perform the Bankers Investment. In addition to that, Fortune Brands is 2.44 times more volatile than Bankers Investment Trust. It trades about -0.02 of its total potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.08 per unit of volatility. If you would invest 10,798 in Bankers Investment Trust on November 7, 2024 and sell it today you would earn a total of 1,582 from holding Bankers Investment Trust or generate 14.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.62% |
| Values | Daily Returns |
Fortune Brands Home vs. Bankers Investment Trust
Performance |
| Timeline |
| Fortune Brands Home |
| Bankers Investment Trust |
Fortune Brands and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Bankers Investment
The main advantage of trading using opposite Fortune Brands and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| Fortune Brands vs. Samsung Electronics Co | Fortune Brands vs. Samsung Electronics Co | Fortune Brands vs. Toyota Motor Corp | Fortune Brands vs. Reliance Industries Ltd |
| Bankers Investment vs. Gamma Communications PLC | Bankers Investment vs. Zoom Video Communications | Bankers Investment vs. Litigation Capital Management | Bankers Investment vs. Aeorema Communications Plc |
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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