Correlation Between Aston Martin and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Aston Martin and Fortune Brands 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 Aston Martin and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aston Martin Lagonda and Fortune Brands Home, you can compare the effects of market volatilities on Aston Martin and Fortune Brands 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 Aston Martin with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston Martin and Fortune Brands.
Diversification Opportunities for Aston Martin and Fortune Brands
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aston and Fortune is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and Aston Martin 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 Aston Martin Lagonda are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Aston Martin i.e., Aston Martin and Fortune Brands go up and down completely randomly.
Pair Corralation between Aston Martin and Fortune Brands
Assuming the 90 days trading horizon Aston Martin Lagonda is expected to under-perform the Fortune Brands. In addition to that, Aston Martin is 1.58 times more volatile than Fortune Brands Home. It trades about -0.07 of its total potential returns per unit of risk. Fortune Brands Home is currently generating about 0.01 per unit of volatility. If you would invest 7,787 in Fortune Brands Home on September 14, 2024 and sell it today you would lose (4.00) from holding Fortune Brands Home or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.0% |
| Values | Daily Returns |
Aston Martin Lagonda vs. Fortune Brands Home
Performance |
| Timeline |
| Aston Martin Lagonda |
| Fortune Brands Home |
Aston Martin and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aston Martin and Fortune Brands
The main advantage of trading using opposite Aston Martin and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aston Martin position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Aston Martin vs. Federal Realty Investment | Aston Martin vs. Fortune Brands Home | Aston Martin vs. Lowland Investment Co | Aston Martin vs. Bankers Investment Trust |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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