Correlation Between Cairn Homes and Futura Medical
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Futura Medical 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 Cairn Homes and Futura Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Futura Medical, you can compare the effects of market volatilities on Cairn Homes and Futura Medical 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 Cairn Homes with a short position of Futura Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Futura Medical.
Diversification Opportunities for Cairn Homes and Futura Medical
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cairn and Futura is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Cairn Homes i.e., Cairn Homes and Futura Medical go up and down completely randomly.
Pair Corralation between Cairn Homes and Futura Medical
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.61 times more return on investment than Futura Medical. However, Cairn Homes PLC is 1.63 times less risky than Futura Medical. It trades about 0.1 of its potential returns per unit of risk. Futura Medical is currently generating about -0.01 per unit of risk. If you would invest 13,991 in Cairn Homes PLC on September 2, 2024 and sell it today you would earn a total of 3,109 from holding Cairn Homes PLC or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Futura Medical
Performance |
| Timeline |
| Cairn Homes PLC |
| Futura Medical |
Cairn Homes and Futura Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Futura Medical
The main advantage of trading using opposite Cairn Homes and Futura Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Futura Medical 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 Futura Medical will offset losses from the drop in Futura Medical's long position.| Cairn Homes vs. Rightmove PLC | Cairn Homes vs. Bioventix | Cairn Homes vs. VeriSign | Cairn Homes vs. Games Workshop Group |
| Futura Medical vs. Viridian Therapeutics | Futura Medical vs. CVR Energy | Futura Medical vs. Nationwide Building Society | Futura Medical vs. Dollar Tree |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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