Correlation Between American Leisure and FUNR
Can any of the company-specific risk be diversified away by investing in both American Leisure and FUNR 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 American Leisure and FUNR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Leisure Holdings and FUNR, you can compare the effects of market volatilities on American Leisure and FUNR 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 American Leisure with a short position of FUNR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Leisure and FUNR.
Diversification Opportunities for American Leisure and FUNR
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and FUNR is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Leisure Holdings and FUNR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUNR and American Leisure 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 American Leisure Holdings are associated (or correlated) with FUNR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUNR has no effect on the direction of American Leisure i.e., American Leisure and FUNR go up and down completely randomly.
Pair Corralation between American Leisure and FUNR
Given the investment horizon of 90 days American Leisure Holdings is expected to generate 1.6 times more return on investment than FUNR. However, American Leisure is 1.6 times more volatile than FUNR. It trades about 0.25 of its potential returns per unit of risk. FUNR is currently generating about 0.12 per unit of risk. If you would invest 0.01 in American Leisure Holdings on November 2, 2024 and sell it today you would earn a total of 0.01 from holding American Leisure Holdings or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
American Leisure Holdings vs. FUNR
Performance |
| Timeline |
| American Leisure Holdings |
| FUNR |
American Leisure and FUNR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Leisure and FUNR
The main advantage of trading using opposite American Leisure and FUNR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Leisure position performs unexpectedly, FUNR 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 FUNR will offset losses from the drop in FUNR's long position.| American Leisure vs. Supurva Healthcare Group | American Leisure vs. China Health Management | American Leisure vs. Embrace Change Acquisition | American Leisure vs. TransAKT |
| FUNR vs. Supurva Healthcare Group | FUNR vs. China Health Management | FUNR vs. Embrace Change Acquisition | FUNR vs. TransAKT |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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