Correlation Between Flow Traders and Software Circle
Can any of the company-specific risk be diversified away by investing in both Flow Traders and Software Circle 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 Flow Traders and Software Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Traders NV and Software Circle plc, you can compare the effects of market volatilities on Flow Traders and Software Circle 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 Flow Traders with a short position of Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and Software Circle.
Diversification Opportunities for Flow Traders and Software Circle
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Flow and Software is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders NV and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc and Flow Traders 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 Flow Traders NV are associated (or correlated) with Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of Flow Traders i.e., Flow Traders and Software Circle go up and down completely randomly.
Pair Corralation between Flow Traders and Software Circle
Assuming the 90 days trading horizon Flow Traders NV is expected to generate 0.89 times more return on investment than Software Circle. However, Flow Traders NV is 1.12 times less risky than Software Circle. It trades about 0.19 of its potential returns per unit of risk. Software Circle plc is currently generating about 0.16 per unit of risk. If you would invest 1,748 in Flow Traders NV on November 3, 2024 and sell it today you would earn a total of 666.00 from holding Flow Traders NV or generate 38.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flow Traders NV vs. Software Circle plc
Performance |
| Timeline |
| Flow Traders NV |
| Software Circle plc |
Flow Traders and Software Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Traders and Software Circle
The main advantage of trading using opposite Flow Traders and Software Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders position performs unexpectedly, Software Circle 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 Software Circle will offset losses from the drop in Software Circle's long position.| Flow Traders vs. Playtech Plc | Flow Traders vs. CAP LEASE AVIATION | Flow Traders vs. Monster Beverage Corp | Flow Traders vs. CleanTech Lithium plc |
| Software Circle vs. Zoom Video Communications | Software Circle vs. Liontrust Asset Management | Software Circle vs. Adriatic Metals | Software Circle vs. Infrastrutture Wireless Italiane |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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