Correlation Between Fortive and Keyence
Can any of the company-specific risk be diversified away by investing in both Fortive and Keyence 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 Fortive and Keyence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortive and Keyence, you can compare the effects of market volatilities on Fortive and Keyence 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 Fortive with a short position of Keyence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortive and Keyence.
Diversification Opportunities for Fortive and Keyence
Very weak diversification
The 3 months correlation between Fortive and Keyence is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fortive and Keyence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyence and Fortive 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 Fortive are associated (or correlated) with Keyence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyence has no effect on the direction of Fortive i.e., Fortive and Keyence go up and down completely randomly.
Pair Corralation between Fortive and Keyence
Assuming the 90 days horizon Fortive is expected to generate 0.81 times more return on investment than Keyence. However, Fortive is 1.24 times less risky than Keyence. It trades about 0.42 of its potential returns per unit of risk. Keyence is currently generating about -0.02 per unit of risk. If you would invest 6,535 in Fortive on September 2, 2024 and sell it today you would earn a total of 945.00 from holding Fortive or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortive vs. Keyence
Performance |
| Timeline |
| Fortive |
| Keyence |
Fortive and Keyence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortive and Keyence
The main advantage of trading using opposite Fortive and Keyence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortive position performs unexpectedly, Keyence 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 Keyence will offset losses from the drop in Keyence's long position.| Fortive vs. Tower Semiconductor | Fortive vs. British American Tobacco | Fortive vs. TOREX SEMICONDUCTOR LTD | Fortive vs. NXP Semiconductors NV |
| Keyence vs. Japan Tobacco | Keyence vs. National Retail Properties | Keyence vs. FAST RETAIL ADR | Keyence vs. TRADEGATE |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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