Correlation Between Fortune Brands and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Ecclesiastical Insurance 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office, you can compare the effects of market volatilities on Fortune Brands and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Ecclesiastical Insurance.
Diversification Opportunities for Fortune Brands and Ecclesiastical Insurance
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortune and Ecclesiastical is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of Fortune Brands i.e., Fortune Brands and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between Fortune Brands and Ecclesiastical Insurance
Assuming the 90 days trading horizon Fortune Brands Home is expected to under-perform the Ecclesiastical Insurance. In addition to that, Fortune Brands is 1.71 times more volatile than Ecclesiastical Insurance Office. It trades about -0.16 of its total potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about -0.02 per unit of volatility. If you would invest 13,500 in Ecclesiastical Insurance Office on August 30, 2024 and sell it today you would lose (100.00) from holding Ecclesiastical Insurance Office or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortune Brands Home vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| Fortune Brands Home |
| Ecclesiastical Insurance |
Fortune Brands and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Ecclesiastical Insurance
The main advantage of trading using opposite Fortune Brands and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance's long position.| Fortune Brands vs. Tungsten West PLC | Fortune Brands vs. Argo Group Limited | Fortune Brands vs. Hardide PLC | Fortune Brands vs. Versarien PLC |
| Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Hyundai Motor | Ecclesiastical Insurance vs. Toyota Motor Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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