Correlation Between ARN Media and Future Generation
Can any of the company-specific risk be diversified away by investing in both ARN Media and Future Generation 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 ARN Media and Future Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and Future Generation Global, you can compare the effects of market volatilities on ARN Media and Future Generation 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 ARN Media with a short position of Future Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Future Generation.
Diversification Opportunities for ARN Media and Future Generation
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARN and Future is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Future Generation Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Generation Global and ARN Media 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 ARN Media Limited are associated (or correlated) with Future Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Generation Global has no effect on the direction of ARN Media i.e., ARN Media and Future Generation go up and down completely randomly.
Pair Corralation between ARN Media and Future Generation
Assuming the 90 days trading horizon ARN Media is expected to generate 4.75 times less return on investment than Future Generation. In addition to that, ARN Media is 2.69 times more volatile than Future Generation Global. It trades about 0.01 of its total potential returns per unit of risk. Future Generation Global is currently generating about 0.07 per unit of volatility. If you would invest 101.00 in Future Generation Global on September 14, 2024 and sell it today you would earn a total of 38.00 from holding Future Generation Global or generate 37.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ARN Media Limited vs. Future Generation Global
Performance |
| Timeline |
| ARN Media Limited |
| Future Generation Global |
ARN Media and Future Generation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARN Media and Future Generation
The main advantage of trading using opposite ARN Media and Future Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Future Generation 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 Future Generation will offset losses from the drop in Future Generation's long position.| ARN Media vs. MFF Capital Investments | ARN Media vs. Aurelia Metals | ARN Media vs. Falcon Metals | ARN Media vs. Garda Diversified Ppty |
| Future Generation vs. Saferoads Holdings | Future Generation vs. ARN Media Limited | Future Generation vs. Dicker Data | Future Generation vs. Bio Gene 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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