Correlation Between Big Yellow and Fibra Terrafina
Can any of the company-specific risk be diversified away by investing in both Big Yellow and Fibra Terrafina 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 Big Yellow and Fibra Terrafina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Yellow Group and Fibra Terrafina, you can compare the effects of market volatilities on Big Yellow and Fibra Terrafina 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 Big Yellow with a short position of Fibra Terrafina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Yellow and Fibra Terrafina.
Diversification Opportunities for Big Yellow and Fibra Terrafina
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Big and Fibra is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Big Yellow Group and Fibra Terrafina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Terrafina and Big Yellow 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 Big Yellow Group are associated (or correlated) with Fibra Terrafina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Terrafina has no effect on the direction of Big Yellow i.e., Big Yellow and Fibra Terrafina go up and down completely randomly.
Pair Corralation between Big Yellow and Fibra Terrafina
Assuming the 90 days horizon Big Yellow is expected to generate 1.57 times less return on investment than Fibra Terrafina. But when comparing it to its historical volatility, Big Yellow Group is 1.8 times less risky than Fibra Terrafina. It trades about 0.02 of its potential returns per unit of risk. Fibra Terrafina is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Fibra Terrafina on September 3, 2024 and sell it today you would lose (10.00) from holding Fibra Terrafina or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.7% |
| Values | Daily Returns |
Big Yellow Group vs. Fibra Terrafina
Performance |
| Timeline |
| Big Yellow Group |
| Fibra Terrafina |
Big Yellow and Fibra Terrafina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Yellow and Fibra Terrafina
The main advantage of trading using opposite Big Yellow and Fibra Terrafina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Yellow position performs unexpectedly, Fibra Terrafina 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 Fibra Terrafina will offset losses from the drop in Fibra Terrafina's long position.| Big Yellow vs. Terreno Realty | Big Yellow vs. LXP Industrial Trust | Big Yellow vs. Rexford Industrial Realty | Big Yellow vs. First Industrial Realty |
| Fibra Terrafina vs. Big Yellow Group | Fibra Terrafina vs. Plymouth Industrial REIT | Fibra Terrafina vs. LXP Industrial Trust | Fibra Terrafina vs. Terreno Realty |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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