Correlation Between American West and Fisher Paykel
Can any of the company-specific risk be diversified away by investing in both American West 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 American West and Fisher Paykel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American West Metals and Fisher Paykel Healthcare, you can compare the effects of market volatilities on American West 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 American West with a short position of Fisher Paykel. Check out your portfolio center. Please also check ongoing floating volatility patterns of American West and Fisher Paykel.
Diversification Opportunities for American West and Fisher Paykel
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Fisher is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding American West Metals 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 American West 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 West Metals 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 American West i.e., American West and Fisher Paykel go up and down completely randomly.
Pair Corralation between American West and Fisher Paykel
Assuming the 90 days trading horizon American West Metals is expected to under-perform the Fisher Paykel. In addition to that, American West is 2.18 times more volatile than Fisher Paykel Healthcare. It trades about -0.35 of its total potential returns per unit of risk. Fisher Paykel Healthcare is currently generating about 0.07 per unit of volatility. If you would invest 3,370 in Fisher Paykel Healthcare on August 25, 2024 and sell it today you would earn a total of 69.00 from holding Fisher Paykel Healthcare or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American West Metals vs. Fisher Paykel Healthcare
Performance |
| Timeline |
| American West Metals |
| Fisher Paykel Healthcare |
American West and Fisher Paykel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American West and Fisher Paykel
The main advantage of trading using opposite American West and Fisher Paykel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American West 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.| American West vs. Northern Star Resources | American West vs. Evolution Mining | American West vs. Bluescope Steel | American West vs. Sandfire Resources NL |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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