Correlation Between CompuGroup Medical and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and Fortune Brands 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 CompuGroup Medical and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompuGroup Medical AG and Fortune Brands Home, you can compare the effects of market volatilities on CompuGroup Medical and Fortune Brands 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 CompuGroup Medical with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and Fortune Brands.
Diversification Opportunities for CompuGroup Medical and Fortune Brands
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CompuGroup and Fortune is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical AG and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and CompuGroup Medical 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 CompuGroup Medical AG are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and Fortune Brands go up and down completely randomly.
Pair Corralation between CompuGroup Medical and Fortune Brands
Assuming the 90 days trading horizon CompuGroup Medical AG is expected to under-perform the Fortune Brands. In addition to that, CompuGroup Medical is 1.17 times more volatile than Fortune Brands Home. It trades about -0.05 of its total potential returns per unit of risk. Fortune Brands Home is currently generating about 0.06 per unit of volatility. If you would invest 5,125 in Fortune Brands Home on August 30, 2024 and sell it today you would earn a total of 2,704 from holding Fortune Brands Home or generate 52.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.86% |
| Values | Daily Returns |
CompuGroup Medical AG vs. Fortune Brands Home
Performance |
| Timeline |
| CompuGroup Medical |
| Fortune Brands Home |
CompuGroup Medical and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and Fortune Brands
The main advantage of trading using opposite CompuGroup Medical and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| CompuGroup Medical vs. Lendinvest PLC | CompuGroup Medical vs. Neometals | CompuGroup Medical vs. Albion Technology General | CompuGroup Medical vs. Jupiter Fund Management |
| Fortune Brands vs. Lendinvest PLC | Fortune Brands vs. Neometals | Fortune Brands vs. Albion Technology General | Fortune Brands vs. Jupiter Fund Management |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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