Correlation Between Fortune Brands and Marks
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Marks 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 Marks 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 Marks and Spencer, you can compare the effects of market volatilities on Fortune Brands and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Marks.
Diversification Opportunities for Fortune Brands and Marks
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortune and Marks is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Fortune Brands i.e., Fortune Brands and Marks go up and down completely randomly.
Pair Corralation between Fortune Brands and Marks
Assuming the 90 days trading horizon Fortune Brands Home is expected to under-perform the Marks. In addition to that, Fortune Brands is 1.19 times more volatile than Marks and Spencer. It trades about -0.01 of its total potential returns per unit of risk. Marks and Spencer is currently generating about 0.06 per unit of volatility. If you would invest 26,792 in Marks and Spencer on October 16, 2024 and sell it today you would earn a total of 6,468 from holding Marks and Spencer or generate 24.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.39% |
| Values | Daily Returns |
Fortune Brands Home vs. Marks and Spencer
Performance |
| Timeline |
| Fortune Brands Home |
| Marks and Spencer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fortune Brands and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Marks
The main advantage of trading using opposite Fortune Brands and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Fortune Brands vs. Fresenius Medical Care | Fortune Brands vs. CAP LEASE AVIATION | Fortune Brands vs. Vienna Insurance Group | Fortune Brands vs. MTI Wireless Edge |
| Marks vs. Gaztransport et Technigaz | Marks vs. Verizon Communications | Marks vs. Home Depot | Marks vs. Cairo Communication SpA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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