Correlation Between Falcon Metals and Autosports
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Autosports 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 Falcon Metals and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Autosports Group, you can compare the effects of market volatilities on Falcon Metals and Autosports 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 Falcon Metals with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Autosports.
Diversification Opportunities for Falcon Metals and Autosports
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Falcon and Autosports is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Falcon Metals 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 Falcon Metals are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Falcon Metals i.e., Falcon Metals and Autosports go up and down completely randomly.
Pair Corralation between Falcon Metals and Autosports
Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Autosports. In addition to that, Falcon Metals is 2.94 times more volatile than Autosports Group. It trades about -0.06 of its total potential returns per unit of risk. Autosports Group is currently generating about -0.17 per unit of volatility. If you would invest 185.00 in Autosports Group on October 12, 2024 and sell it today you would lose (10.00) from holding Autosports Group or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Autosports Group
Performance |
| Timeline |
| Falcon Metals |
| Autosports Group |
Falcon Metals and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Autosports
The main advantage of trading using opposite Falcon Metals and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Falcon Metals vs. Bluescope Steel | Falcon Metals vs. Hawsons Iron | Falcon Metals vs. Red Hill Iron | Falcon Metals vs. Ironbark Capital |
| Autosports vs. Collins Foods | Autosports vs. Aurelia Metals | Autosports vs. Falcon Metals | Autosports vs. Everest Metals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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