Correlation Between Agronomics and Flow Capital
Can any of the company-specific risk be diversified away by investing in both Agronomics and Flow Capital 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 Agronomics and Flow Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agronomics Limited and Flow Capital Corp, you can compare the effects of market volatilities on Agronomics and Flow Capital 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 Agronomics with a short position of Flow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agronomics and Flow Capital.
Diversification Opportunities for Agronomics and Flow Capital
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Agronomics and Flow is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Agronomics Limited and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and Agronomics 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 Agronomics Limited are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of Agronomics i.e., Agronomics and Flow Capital go up and down completely randomly.
Pair Corralation between Agronomics and Flow Capital
Assuming the 90 days horizon Agronomics Limited is expected to generate 2.44 times more return on investment than Flow Capital. However, Agronomics is 2.44 times more volatile than Flow Capital Corp. It trades about 0.44 of its potential returns per unit of risk. Flow Capital Corp is currently generating about -0.22 per unit of risk. If you would invest 4.50 in Agronomics Limited on November 28, 2024 and sell it today you would earn a total of 3.74 from holding Agronomics Limited or generate 83.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agronomics Limited vs. Flow Capital Corp
Performance |
| Timeline |
| Agronomics Limited |
| Flow Capital Corp |
Agronomics and Flow Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agronomics and Flow Capital
The main advantage of trading using opposite Agronomics and Flow Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agronomics position performs unexpectedly, Flow Capital 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 Flow Capital will offset losses from the drop in Flow Capital's long position.| Agronomics vs. Flow Capital Corp | Agronomics vs. Ameritrans Capital Corp | Agronomics vs. Blackhawk Growth Corp | Agronomics vs. Azimut Holding SpA |
| Flow Capital vs. Guardian Capital Group | Flow Capital vs. Urbana | Flow Capital vs. Princeton Capital | Flow Capital vs. Blackhawk Growth Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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