Correlation Between Bloomsbury Publishing and Fulcrum Metals
Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing and Fulcrum Metals 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 Bloomsbury Publishing and Fulcrum Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomsbury Publishing Plc and Fulcrum Metals PLC, you can compare the effects of market volatilities on Bloomsbury Publishing and Fulcrum Metals 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 Bloomsbury Publishing with a short position of Fulcrum Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Fulcrum Metals.
Diversification Opportunities for Bloomsbury Publishing and Fulcrum Metals
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bloomsbury and Fulcrum is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Fulcrum Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Metals PLC and Bloomsbury Publishing 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 Bloomsbury Publishing Plc are associated (or correlated) with Fulcrum Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Metals PLC has no effect on the direction of Bloomsbury Publishing i.e., Bloomsbury Publishing and Fulcrum Metals go up and down completely randomly.
Pair Corralation between Bloomsbury Publishing and Fulcrum Metals
Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to generate 1.02 times more return on investment than Fulcrum Metals. However, Bloomsbury Publishing is 1.02 times more volatile than Fulcrum Metals PLC. It trades about 0.05 of its potential returns per unit of risk. Fulcrum Metals PLC is currently generating about -0.08 per unit of risk. If you would invest 40,066 in Bloomsbury Publishing Plc on October 16, 2024 and sell it today you would earn a total of 20,134 from holding Bloomsbury Publishing Plc or generate 50.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomsbury Publishing Plc vs. Fulcrum Metals PLC
Performance |
| Timeline |
| Bloomsbury Publishing Plc |
| Fulcrum Metals PLC |
Bloomsbury Publishing and Fulcrum Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomsbury Publishing and Fulcrum Metals
The main advantage of trading using opposite Bloomsbury Publishing and Fulcrum Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing position performs unexpectedly, Fulcrum Metals 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 Fulcrum Metals will offset losses from the drop in Fulcrum Metals' long position.The idea behind Bloomsbury Publishing Plc and Fulcrum Metals PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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