Correlation Between Sunny Optical and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Sunny Optical 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 Sunny Optical and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and Fortune Brands Home, you can compare the effects of market volatilities on Sunny Optical 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 Sunny Optical with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Fortune Brands.
Diversification Opportunities for Sunny Optical and Fortune Brands
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sunny and Fortune is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology 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 Sunny Optical 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 Sunny Optical Technology 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 Sunny Optical i.e., Sunny Optical and Fortune Brands go up and down completely randomly.
Pair Corralation between Sunny Optical and Fortune Brands
Assuming the 90 days trading horizon Sunny Optical Technology is expected to under-perform the Fortune Brands. In addition to that, Sunny Optical is 1.67 times more volatile than Fortune Brands Home. It trades about -0.01 of its total potential returns per unit of risk. Fortune Brands Home is currently generating about 0.03 per unit of volatility. If you would invest 6,456 in Fortune Brands Home on October 25, 2024 and sell it today you would earn a total of 910.00 from holding Fortune Brands Home or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.87% |
| Values | Daily Returns |
Sunny Optical Technology vs. Fortune Brands Home
Performance |
| Timeline |
| Sunny Optical Technology |
| Fortune Brands Home |
Sunny Optical and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Fortune Brands
The main advantage of trading using opposite Sunny Optical and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical 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.| Sunny Optical vs. Polar Capital Technology | Sunny Optical vs. Prosiebensat 1 Media | Sunny Optical vs. Software Circle plc | Sunny Optical vs. SMA Solar Technology |
| Fortune Brands vs. Raytheon Technologies Corp | Fortune Brands vs. Morgan Advanced Materials | Fortune Brands vs. Playtech Plc | Fortune Brands vs. Micron Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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