Correlation Between Frontdoor and Musti Group
Can any of the company-specific risk be diversified away by investing in both Frontdoor and Musti Group 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 Frontdoor and Musti Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontdoor and Musti Group Oyj, you can compare the effects of market volatilities on Frontdoor and Musti Group 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 Frontdoor with a short position of Musti Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontdoor and Musti Group.
Diversification Opportunities for Frontdoor and Musti Group
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Frontdoor and Musti is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Frontdoor and Musti Group Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Musti Group Oyj and Frontdoor 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 Frontdoor are associated (or correlated) with Musti Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Musti Group Oyj has no effect on the direction of Frontdoor i.e., Frontdoor and Musti Group go up and down completely randomly.
Pair Corralation between Frontdoor and Musti Group
Assuming the 90 days horizon Frontdoor is expected to generate 1.36 times more return on investment than Musti Group. However, Frontdoor is 1.36 times more volatile than Musti Group Oyj. It trades about 0.19 of its potential returns per unit of risk. Musti Group Oyj is currently generating about -0.09 per unit of risk. If you would invest 3,300 in Frontdoor on September 5, 2024 and sell it today you would earn a total of 2,200 from holding Frontdoor or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontdoor vs. Musti Group Oyj
Performance |
| Timeline |
| Frontdoor |
| Musti Group Oyj |
Frontdoor and Musti Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontdoor and Musti Group
The main advantage of trading using opposite Frontdoor and Musti Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontdoor position performs unexpectedly, Musti Group 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 Musti Group will offset losses from the drop in Musti Group's long position.| Frontdoor vs. Science Applications International | Frontdoor vs. Public Storage | Frontdoor vs. Fidelity National Information | Frontdoor vs. 24SEVENOFFICE GROUP AB |
| Musti Group vs. BOYD GROUP SERVICES | Musti Group vs. Frontdoor | Musti Group vs. CVS Group plc | Musti Group vs. Gesundheitswelt Chiemgau AG |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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