Correlation Between Absa Group and FFW
Can any of the company-specific risk be diversified away by investing in both Absa Group and FFW 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 Absa Group and FFW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and FFW Corporation, you can compare the effects of market volatilities on Absa Group and FFW 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 Absa Group with a short position of FFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and FFW.
Diversification Opportunities for Absa Group and FFW
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Absa and FFW is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation and Absa Group 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 Absa Group Limited are associated (or correlated) with FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Absa Group i.e., Absa Group and FFW go up and down completely randomly.
Pair Corralation between Absa Group and FFW
If you would invest 811.00 in Absa Group Limited on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Absa Group Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. FFW Corp.
Performance |
| Timeline |
| Absa Group Limited |
| FFW Corporation |
Absa Group and FFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and FFW
The main advantage of trading using opposite Absa Group and FFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, FFW 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 FFW will offset losses from the drop in FFW's long position.| Absa Group vs. Piraeus Bank SA | Absa Group vs. Turkiye Garanti Bankasi | Absa Group vs. Uwharrie Capital Corp |
| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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