Correlation Between Fortune Brands and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Fortune Brands and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Intermediate Capital.
Diversification Opportunities for Fortune Brands and Intermediate Capital
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortune and Intermediate is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Fortune Brands i.e., Fortune Brands and Intermediate Capital go up and down completely randomly.
Pair Corralation between Fortune Brands and Intermediate Capital
Assuming the 90 days trading horizon Fortune Brands Home is expected to under-perform the Intermediate Capital. But the stock apears to be less risky and, when comparing its historical volatility, Fortune Brands Home is 1.18 times less risky than Intermediate Capital. The stock trades about -0.16 of its potential returns per unit of risk. The Intermediate Capital Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 211,800 in Intermediate Capital Group on August 30, 2024 and sell it today you would lose (800.00) from holding Intermediate Capital Group or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortune Brands Home vs. Intermediate Capital Group
Performance |
| Timeline |
| Fortune Brands Home |
| Intermediate Capital |
Fortune Brands and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Intermediate Capital
The main advantage of trading using opposite Fortune Brands and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital'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 |
| Intermediate Capital vs. Sabre Insurance Group | Intermediate Capital vs. Tatton Asset Management | Intermediate Capital vs. Zurich Insurance Group | Intermediate Capital vs. Associated British Foods |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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