Correlation Between FORWARD AIR and McPhy Energy
Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and McPhy Energy 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 FORWARD AIR and McPhy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FORWARD AIR P and McPhy Energy SA, you can compare the effects of market volatilities on FORWARD AIR and McPhy Energy 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 FORWARD AIR with a short position of McPhy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and McPhy Energy.
Diversification Opportunities for FORWARD AIR and McPhy Energy
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FORWARD and McPhy is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and McPhy Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McPhy Energy SA and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with McPhy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McPhy Energy SA has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and McPhy Energy go up and down completely randomly.
Pair Corralation between FORWARD AIR and McPhy Energy
Assuming the 90 days horizon FORWARD AIR P is expected to generate 0.36 times more return on investment than McPhy Energy. However, FORWARD AIR P is 2.78 times less risky than McPhy Energy. It trades about -0.05 of its potential returns per unit of risk. McPhy Energy SA is currently generating about -0.23 per unit of risk. If you would invest 3,280 in FORWARD AIR P on September 12, 2024 and sell it today you would lose (100.00) from holding FORWARD AIR P or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FORWARD AIR P vs. McPhy Energy SA
Performance |
| Timeline |
| FORWARD AIR P |
| McPhy Energy SA |
FORWARD AIR and McPhy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FORWARD AIR and McPhy Energy
The main advantage of trading using opposite FORWARD AIR and McPhy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR position performs unexpectedly, McPhy Energy 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 McPhy Energy will offset losses from the drop in McPhy Energy's long position.| FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc |
| McPhy Energy vs. Apollo Medical Holdings | McPhy Energy vs. MeVis Medical Solutions | McPhy Energy vs. SCANDMEDICAL SOLDK 040 | McPhy Energy vs. BURLINGTON STORES |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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