Correlation Between Dicker Data and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Dicker Data and Falcon 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 Dicker Data and Falcon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dicker Data and Falcon Metals, you can compare the effects of market volatilities on Dicker Data and Falcon 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 Dicker Data with a short position of Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicker Data and Falcon Metals.
Diversification Opportunities for Dicker Data and Falcon Metals
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dicker and Falcon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dicker Data and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals and Dicker Data 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 Dicker Data are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Dicker Data i.e., Dicker Data and Falcon Metals go up and down completely randomly.
Pair Corralation between Dicker Data and Falcon Metals
Assuming the 90 days trading horizon Dicker Data is expected to generate 2.52 times less return on investment than Falcon Metals. But when comparing it to its historical volatility, Dicker Data is 3.68 times less risky than Falcon Metals. It trades about 0.03 of its potential returns per unit of risk. Falcon Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Falcon Metals on September 12, 2024 and sell it today you would lose (7.00) from holding Falcon Metals or give up 31.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dicker Data vs. Falcon Metals
Performance |
| Timeline |
| Dicker Data |
| Falcon Metals |
Dicker Data and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dicker Data and Falcon Metals
The main advantage of trading using opposite Dicker Data and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicker Data position performs unexpectedly, Falcon 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Dicker Data vs. Aneka Tambang Tbk | Dicker Data vs. BHP Group Limited | Dicker Data vs. Commonwealth Bank | Dicker Data vs. Commonwealth Bank of |
| Falcon Metals vs. EMvision Medical Devices | Falcon Metals vs. Iron Road | Falcon Metals vs. Charter Hall Education | Falcon Metals vs. Medical Developments International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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