Correlation Between Fair Oaks and Investment
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and 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 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 The Investment, you can compare the effects of market volatilities on Fair Oaks and 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Investment.
Diversification Opportunities for Fair Oaks and Investment
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fair and Investment is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and The Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment has no effect on the direction of Fair Oaks i.e., Fair Oaks and Investment go up and down completely randomly.
Pair Corralation between Fair Oaks and Investment
Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.72 times more return on investment than Investment. However, Fair Oaks Income is 1.4 times less risky than Investment. It trades about 0.11 of its potential returns per unit of risk. The Investment is currently generating about 0.05 per unit of risk. If you would invest 44.00 in Fair Oaks Income on August 30, 2024 and sell it today you would earn a total of 13.00 from holding Fair Oaks Income or generate 29.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Oaks Income vs. The Investment
Performance |
| Timeline |
| Fair Oaks Income |
| Investment |
Fair Oaks and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Investment
The main advantage of trading using opposite Fair Oaks and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, 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 Investment will offset losses from the drop in Investment's long position.| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Cognizant Technology Solutions | Fair Oaks vs. Lendinvest PLC |
| Investment vs. Lendinvest PLC | Investment vs. Neometals | Investment vs. Albion Technology General | Investment vs. Jupiter Fund Management |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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