Correlation Between Hollywood Bowl and Future Metals
Can any of the company-specific risk be diversified away by investing in both Hollywood Bowl and Future 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 Hollywood Bowl and Future Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hollywood Bowl Group and Future Metals NL, you can compare the effects of market volatilities on Hollywood Bowl and Future 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 Hollywood Bowl with a short position of Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hollywood Bowl and Future Metals.
Diversification Opportunities for Hollywood Bowl and Future Metals
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hollywood and Future is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL and Hollywood Bowl 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 Hollywood Bowl Group are associated (or correlated) with Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Future Metals go up and down completely randomly.
Pair Corralation between Hollywood Bowl and Future Metals
Assuming the 90 days trading horizon Hollywood Bowl Group is expected to under-perform the Future Metals. But the stock apears to be less risky and, when comparing its historical volatility, Hollywood Bowl Group is 2.3 times less risky than Future Metals. The stock trades about -0.02 of its potential returns per unit of risk. The Future Metals NL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Future Metals NL on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Future Metals NL or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hollywood Bowl Group vs. Future Metals NL
Performance |
| Timeline |
| Hollywood Bowl Group |
| Future Metals NL |
Hollywood Bowl and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hollywood Bowl and Future Metals
The main advantage of trading using opposite Hollywood Bowl and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl position performs unexpectedly, Future 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 Future Metals will offset losses from the drop in Future Metals' long position.| Hollywood Bowl vs. Austevoll Seafood ASA | Hollywood Bowl vs. Trainline Plc | Hollywood Bowl vs. Ecofin Global Utilities | Hollywood Bowl vs. Lindsell Train Investment |
| Future Metals vs. Litigation Capital Management | Future Metals vs. Playtech Plc | Future Metals vs. Raytheon Technologies Corp | Future Metals vs. Microchip Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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