Correlation Between Baker Steel and Foresight Environmental
Can any of the company-specific risk be diversified away by investing in both Baker Steel and Foresight Environmental 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 Baker Steel and Foresight Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and Foresight Environmental Infrastructure, you can compare the effects of market volatilities on Baker Steel and Foresight Environmental 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 Baker Steel with a short position of Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and Foresight Environmental.
Diversification Opportunities for Baker Steel and Foresight Environmental
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baker and Foresight is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental and Baker Steel 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 Baker Steel Resources are associated (or correlated) with Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Baker Steel i.e., Baker Steel and Foresight Environmental go up and down completely randomly.
Pair Corralation between Baker Steel and Foresight Environmental
Assuming the 90 days trading horizon Baker Steel Resources is expected to generate 1.36 times more return on investment than Foresight Environmental. However, Baker Steel is 1.36 times more volatile than Foresight Environmental Infrastructure. It trades about 0.03 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about -0.07 per unit of risk. If you would invest 5,550 in Baker Steel Resources on August 31, 2024 and sell it today you would earn a total of 250.00 from holding Baker Steel Resources or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Steel Resources vs. Foresight Environmental Infras
Performance |
| Timeline |
| Baker Steel Resources |
| Foresight Environmental |
Baker Steel and Foresight Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and Foresight Environmental
The main advantage of trading using opposite Baker Steel and Foresight Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, Foresight Environmental 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 Foresight Environmental will offset losses from the drop in Foresight Environmental's long position.| Baker Steel vs. One Media iP | Baker Steel vs. Associated British Foods | Baker Steel vs. Hollywood Bowl Group | Baker Steel vs. Liberty Media Corp |
| Foresight Environmental vs. Golden Metal Resources | Foresight Environmental vs. Europa Metals | Foresight Environmental vs. Jacquet Metal Service | Foresight Environmental vs. Verizon Communications |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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