Correlation Between Fortune Brands and Oakley Capital
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Oakley 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 Oakley 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 Oakley Capital Investments, you can compare the effects of market volatilities on Fortune Brands and Oakley 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 Oakley Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Oakley Capital.
Diversification Opportunities for Fortune Brands and Oakley Capital
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortune and Oakley is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of Fortune Brands i.e., Fortune Brands and Oakley Capital go up and down completely randomly.
Pair Corralation between Fortune Brands and Oakley Capital
Assuming the 90 days trading horizon Fortune Brands Home is expected to generate 1.8 times more return on investment than Oakley Capital. However, Fortune Brands is 1.8 times more volatile than Oakley Capital Investments. It trades about 0.02 of its potential returns per unit of risk. Oakley Capital Investments is currently generating about 0.03 per unit of risk. If you would invest 6,052 in Fortune Brands Home on October 9, 2024 and sell it today you would earn a total of 749.00 from holding Fortune Brands Home or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.46% |
| Values | Daily Returns |
Fortune Brands Home vs. Oakley Capital Investments
Performance |
| Timeline |
| Fortune Brands Home |
| Oakley Capital Inves |
Fortune Brands and Oakley Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Oakley Capital
The main advantage of trading using opposite Fortune Brands and Oakley Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Oakley 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 Oakley Capital will offset losses from the drop in Oakley Capital's long position.| Fortune Brands vs. Heavitree Brewery | Fortune Brands vs. Sunny Optical Technology | Fortune Brands vs. Sabien Technology Group | Fortune Brands vs. Axway Software SA |
| Oakley Capital vs. Deltex Medical Group | Oakley Capital vs. Optima Health plc | Oakley Capital vs. Spire Healthcare Group | Oakley Capital vs. Futura Medical |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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