Correlation Between Aberforth Smaller and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Aberforth Smaller and F5 Networks 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 Aberforth Smaller and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberforth Smaller Companies and F5 Networks, you can compare the effects of market volatilities on Aberforth Smaller and F5 Networks 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 Aberforth Smaller with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberforth Smaller and F5 Networks.
Diversification Opportunities for Aberforth Smaller and F5 Networks
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aberforth and 0IL6 is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and Aberforth Smaller 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 Aberforth Smaller Companies are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Aberforth Smaller i.e., Aberforth Smaller and F5 Networks go up and down completely randomly.
Pair Corralation between Aberforth Smaller and F5 Networks
Assuming the 90 days trading horizon Aberforth Smaller is expected to generate 3.47 times less return on investment than F5 Networks. But when comparing it to its historical volatility, Aberforth Smaller Companies is 1.52 times less risky than F5 Networks. It trades about 0.05 of its potential returns per unit of risk. F5 Networks is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,415 in F5 Networks on August 31, 2024 and sell it today you would earn a total of 11,603 from holding F5 Networks or generate 86.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Aberforth Smaller Companies vs. F5 Networks
Performance |
| Timeline |
| Aberforth Smaller |
| F5 Networks |
Aberforth Smaller and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberforth Smaller and F5 Networks
The main advantage of trading using opposite Aberforth Smaller and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberforth Smaller position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.| Aberforth Smaller vs. Wheaton Precious Metals | Aberforth Smaller vs. CompuGroup Medical AG | Aberforth Smaller vs. Futura Medical | Aberforth Smaller vs. Axfood AB |
| F5 Networks vs. Hochschild Mining plc | F5 Networks vs. Flutter Entertainment PLC | F5 Networks vs. Catalyst Media Group | F5 Networks vs. Centaur Media |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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