Correlation Between Fortune Brands and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Cairn Homes 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 Cairn Homes 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 Cairn Homes PLC, you can compare the effects of market volatilities on Fortune Brands and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Cairn Homes.
Diversification Opportunities for Fortune Brands and Cairn Homes
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fortune and Cairn is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Fortune Brands i.e., Fortune Brands and Cairn Homes go up and down completely randomly.
Pair Corralation between Fortune Brands and Cairn Homes
If you would invest 0.00 in Cairn Homes PLC on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Cairn Homes PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortune Brands Home vs. Cairn Homes PLC
Performance |
| Timeline |
| Fortune Brands Home |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cairn Homes PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fortune Brands and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Cairn Homes
The main advantage of trading using opposite Fortune Brands and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Fortune Brands vs. Wheaton Precious Metals | Fortune Brands vs. MTI Wireless Edge | Fortune Brands vs. Jacquet Metal Service | Fortune Brands vs. Capital Metals PLC |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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