Correlation Between Casio Computer and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Casio Computer and Fortescue 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 Casio Computer and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Casio Computer CoLtd and Fortescue Metals Group, you can compare the effects of market volatilities on Casio Computer and Fortescue 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 Casio Computer with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casio Computer and Fortescue Metals.
Diversification Opportunities for Casio Computer and Fortescue Metals
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Casio and Fortescue is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Casio Computer CoLtd and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Casio Computer 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 Casio Computer CoLtd are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Casio Computer i.e., Casio Computer and Fortescue Metals go up and down completely randomly.
Pair Corralation between Casio Computer and Fortescue Metals
Assuming the 90 days trading horizon Casio Computer CoLtd is expected to under-perform the Fortescue Metals. But the stock apears to be less risky and, when comparing its historical volatility, Casio Computer CoLtd is 1.24 times less risky than Fortescue Metals. The stock trades about -0.06 of its potential returns per unit of risk. The Fortescue Metals Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,102 in Fortescue Metals Group on October 24, 2024 and sell it today you would earn a total of 58.00 from holding Fortescue Metals Group or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Casio Computer CoLtd vs. Fortescue Metals Group
Performance |
| Timeline |
| Casio Computer CoLtd |
| Fortescue Metals |
Casio Computer and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Casio Computer and Fortescue Metals
The main advantage of trading using opposite Casio Computer and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casio Computer position performs unexpectedly, Fortescue 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Casio Computer vs. Geely Automobile Holdings | Casio Computer vs. WillScot Mobile Mini | Casio Computer vs. UNIVERSAL MUSIC GROUP | Casio Computer vs. SQUIRREL MEDIA SA |
| Fortescue Metals vs. Casio Computer CoLtd | Fortescue Metals vs. China Communications Services | Fortescue Metals vs. Tradeweb Markets | Fortescue Metals vs. H2O Retailing |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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