Correlation Between EVN AG and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both EVN AG and FARO Technologies 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 EVN AG and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVN AG and FARO Technologies, you can compare the effects of market volatilities on EVN AG and FARO Technologies 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 EVN AG with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVN AG and FARO Technologies.
Diversification Opportunities for EVN AG and FARO Technologies
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EVN and FARO is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EVN AG and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and EVN AG 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 EVN AG are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of EVN AG i.e., EVN AG and FARO Technologies go up and down completely randomly.
Pair Corralation between EVN AG and FARO Technologies
Assuming the 90 days horizon EVN AG is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, EVN AG is 1.38 times less risky than FARO Technologies. The stock trades about -0.1 of its potential returns per unit of risk. The FARO Technologies is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,620 in FARO Technologies on September 13, 2024 and sell it today you would lose (40.00) from holding FARO Technologies or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
EVN AG vs. FARO Technologies
Performance |
| Timeline |
| EVN AG |
| FARO Technologies |
EVN AG and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVN AG and FARO Technologies
The main advantage of trading using opposite EVN AG and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVN AG position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| EVN AG vs. Western Copper and | EVN AG vs. BRIT AMER TOBACCO | EVN AG vs. MCEWEN MINING INC | EVN AG vs. Perseus Mining Limited |
| FARO Technologies vs. HEXAGON AB ADR1 | FARO Technologies vs. Superior Plus Corp | FARO Technologies vs. SIVERS SEMICONDUCTORS AB | FARO Technologies vs. NorAm Drilling AS |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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