Correlation Between Century Communities and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both Century Communities and Fenbo Holdings 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 Century Communities and Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Communities and Fenbo Holdings Limited, you can compare the effects of market volatilities on Century Communities and Fenbo Holdings 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 Century Communities with a short position of Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Communities and Fenbo Holdings.
Diversification Opportunities for Century Communities and Fenbo Holdings
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Century and Fenbo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Century Communities and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and Century Communities 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 Century Communities are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Century Communities i.e., Century Communities and Fenbo Holdings go up and down completely randomly.
Pair Corralation between Century Communities and Fenbo Holdings
Considering the 90-day investment horizon Century Communities is expected to generate 0.26 times more return on investment than Fenbo Holdings. However, Century Communities is 3.79 times less risky than Fenbo Holdings. It trades about 0.04 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 7,429 in Century Communities on August 27, 2024 and sell it today you would earn a total of 1,440 from holding Century Communities or generate 19.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Communities vs. Fenbo Holdings Limited
Performance |
| Timeline |
| Century Communities |
| Fenbo Holdings |
Century Communities and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Communities and Fenbo Holdings
The main advantage of trading using opposite Century Communities and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Communities position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.| Century Communities vs. Taylor Morn Home | Century Communities vs. Beazer Homes USA | Century Communities vs. Meritage | Century Communities vs. TRI Pointe Homes |
| Fenbo Holdings vs. KNOT Offshore Partners | Fenbo Holdings vs. Aldel Financial II | Fenbo Holdings vs. Stepstone Group | Fenbo Holdings vs. Tencent Music Entertainment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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