Correlation Between Fair Oaks and North Atlantic
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and North Atlantic 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 North Atlantic 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 North Atlantic Smaller, you can compare the effects of market volatilities on Fair Oaks and North Atlantic 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 North Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and North Atlantic.
Diversification Opportunities for Fair Oaks and North Atlantic
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fair and North is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and North Atlantic Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Atlantic Smaller 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 North Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Atlantic Smaller has no effect on the direction of Fair Oaks i.e., Fair Oaks and North Atlantic go up and down completely randomly.
Pair Corralation between Fair Oaks and North Atlantic
Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.27 times more return on investment than North Atlantic. However, Fair Oaks Income is 3.66 times less risky than North Atlantic. It trades about 0.13 of its potential returns per unit of risk. North Atlantic Smaller is currently generating about -0.01 per unit of risk. If you would invest 53.00 in Fair Oaks Income on September 19, 2024 and sell it today you would earn a total of 4.00 from holding Fair Oaks Income or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Fair Oaks Income vs. North Atlantic Smaller
Performance |
| Timeline |
| Fair Oaks Income |
| North Atlantic Smaller |
Fair Oaks and North Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and North Atlantic
The main advantage of trading using opposite Fair Oaks and North Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, North Atlantic 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 North Atlantic will offset losses from the drop in North Atlantic's long position.| Fair Oaks vs. Anglesey Mining | Fair Oaks vs. Jacquet Metal Service | Fair Oaks vs. Synthomer plc | Fair Oaks vs. Southern Copper Corp |
| North Atlantic vs. Pentair PLC | North Atlantic vs. Evolution Gaming Group | North Atlantic vs. Martin Marietta Materials | North Atlantic vs. Fair Oaks Income |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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