Correlation Between Australia and Fisher Paykel
Can any of the company-specific risk be diversified away by investing in both Australia and Fisher Paykel 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 Australia and Fisher Paykel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australia and New and Fisher Paykel Healthcare, you can compare the effects of market volatilities on Australia and Fisher Paykel 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 Australia with a short position of Fisher Paykel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australia and Fisher Paykel.
Diversification Opportunities for Australia and Fisher Paykel
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australia and Fisher is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and Fisher Paykel Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Paykel Healthcare and Australia 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 Australia and New are associated (or correlated) with Fisher Paykel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Paykel Healthcare has no effect on the direction of Australia i.e., Australia and Fisher Paykel go up and down completely randomly.
Pair Corralation between Australia and Fisher Paykel
Assuming the 90 days trading horizon Australia is expected to generate 1.55 times less return on investment than Fisher Paykel. But when comparing it to its historical volatility, Australia and New is 1.68 times less risky than Fisher Paykel. It trades about 0.13 of its potential returns per unit of risk. Fisher Paykel Healthcare is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,217 in Fisher Paykel Healthcare on September 3, 2024 and sell it today you would earn a total of 1,246 from holding Fisher Paykel Healthcare or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australia and New vs. Fisher Paykel Healthcare
Performance |
| Timeline |
| Australia and New |
| Fisher Paykel Healthcare |
Australia and Fisher Paykel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australia and Fisher Paykel
The main advantage of trading using opposite Australia and Fisher Paykel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australia position performs unexpectedly, Fisher Paykel 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 Fisher Paykel will offset losses from the drop in Fisher Paykel's long position.| Australia vs. Strickland Metals | Australia vs. GreenX Metals | Australia vs. DY6 Metals | Australia vs. Actinogen Medical |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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