Correlation Between Fortune Brands and Canadian General
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Canadian General 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 Canadian General 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 Canadian General Investments, you can compare the effects of market volatilities on Fortune Brands and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Canadian General.
Diversification Opportunities for Fortune Brands and Canadian General
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fortune and Canadian is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Fortune Brands i.e., Fortune Brands and Canadian General go up and down completely randomly.
Pair Corralation between Fortune Brands and Canadian General
Assuming the 90 days trading horizon Fortune Brands Home is expected to under-perform the Canadian General. In addition to that, Fortune Brands is 1.25 times more volatile than Canadian General Investments. It trades about -0.02 of its total potential returns per unit of risk. Canadian General Investments is currently generating about 0.04 per unit of volatility. If you would invest 210,366 in Canadian General Investments on November 7, 2024 and sell it today you would earn a total of 22,634 from holding Canadian General Investments or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 84.62% |
| Values | Daily Returns |
Fortune Brands Home vs. Canadian General Investments
Performance |
| Timeline |
| Fortune Brands Home |
| Canadian General Inv |
Fortune Brands and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Canadian General
The main advantage of trading using opposite Fortune Brands and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Canadian General 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 Canadian General will offset losses from the drop in Canadian General'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 |
| Canadian General vs. Bankers Investment Trust | Canadian General vs. Kinnevik Investment AB | Canadian General vs. Chrysalis Investments | Canadian General vs. Zegona 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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