Correlation Between SWISS WATER and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both SWISS WATER and Fortescue Metals 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 SWISS WATER and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Fortescue Metals Group, you can compare the effects of market volatilities on SWISS WATER and Fortescue Metals 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 SWISS WATER with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Fortescue Metals.
Diversification Opportunities for SWISS WATER and Fortescue Metals
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SWISS and Fortescue is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and SWISS WATER 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 SWISS WATER DECAFFCOFFEE are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of SWISS WATER i.e., SWISS WATER and Fortescue Metals go up and down completely randomly.
Pair Corralation between SWISS WATER and Fortescue Metals
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 1.34 times more return on investment than Fortescue Metals. However, SWISS WATER is 1.34 times more volatile than Fortescue Metals Group. It trades about 0.04 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.04 per unit of risk. If you would invest 190.00 in SWISS WATER DECAFFCOFFEE on November 8, 2024 and sell it today you would earn a total of 34.00 from holding SWISS WATER DECAFFCOFFEE or generate 17.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. Fortescue Metals Group
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| Fortescue Metals |
SWISS WATER and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and Fortescue Metals
The main advantage of trading using opposite SWISS WATER and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| SWISS WATER vs. FARO Technologies | SWISS WATER vs. International Consolidated Airlines | SWISS WATER vs. American Airlines Group | SWISS WATER vs. Playtech plc |
| Fortescue Metals vs. MINCO SILVER | Fortescue Metals vs. Zijin Mining Group | Fortescue Metals vs. GRIFFIN MINING LTD | Fortescue Metals vs. Eurasia Mining Plc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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