Correlation Between European Residential and Firan Technology
Can any of the company-specific risk be diversified away by investing in both European Residential and Firan Technology 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 European Residential and Firan Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Residential Real and Firan Technology Group, you can compare the effects of market volatilities on European Residential and Firan Technology 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 European Residential with a short position of Firan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Firan Technology.
Diversification Opportunities for European Residential and Firan Technology
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between European and Firan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology and European Residential 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 European Residential Real are associated (or correlated) with Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of European Residential i.e., European Residential and Firan Technology go up and down completely randomly.
Pair Corralation between European Residential and Firan Technology
Assuming the 90 days trading horizon European Residential Real is expected to under-perform the Firan Technology. In addition to that, European Residential is 6.6 times more volatile than Firan Technology Group. It trades about -0.21 of its total potential returns per unit of risk. Firan Technology Group is currently generating about 0.11 per unit of volatility. If you would invest 719.00 in Firan Technology Group on October 22, 2024 and sell it today you would earn a total of 19.00 from holding Firan Technology Group or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. Firan Technology Group
Performance |
| Timeline |
| European Residential Real |
| Firan Technology |
European Residential and Firan Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Firan Technology
The main advantage of trading using opposite European Residential and Firan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential position performs unexpectedly, Firan Technology 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 Firan Technology will offset losses from the drop in Firan Technology's long position.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
| Firan Technology vs. Hammond Power Solutions | Firan Technology vs. Questor Technology | Firan Technology vs. Vecima Networks | Firan Technology vs. Magellan Aerospace |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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