Correlation Between Fair Oaks and Herald Investment
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and Herald Investment 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 Fair Oaks and Herald Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Herald Investment Trust, you can compare the effects of market volatilities on Fair Oaks and Herald Investment 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 Fair Oaks with a short position of Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Herald Investment.
Diversification Opportunities for Fair Oaks and Herald Investment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fair and Herald is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of Fair Oaks i.e., Fair Oaks and Herald Investment go up and down completely randomly.
Pair Corralation between Fair Oaks and Herald Investment
Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.47 times more return on investment than Herald Investment. However, Fair Oaks Income is 2.14 times less risky than Herald Investment. It trades about 0.14 of its potential returns per unit of risk. Herald Investment Trust is currently generating about 0.06 per unit of risk. If you would invest 51.00 in Fair Oaks Income on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Fair Oaks Income or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.32% |
| Values | Daily Returns |
Fair Oaks Income vs. Herald Investment Trust
Performance |
| Timeline |
| Fair Oaks Income |
| Herald Investment Trust |
Fair Oaks and Herald Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Herald Investment
The main advantage of trading using opposite Fair Oaks and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. SoftBank Group Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Las Vegas Sands |
| Herald Investment vs. Zinc Media Group | Herald Investment vs. Intermediate Capital Group | Herald Investment vs. Premier Foods PLC | Herald Investment vs. Axfood AB |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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