Correlation Between Falcon Metals and Red 5
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Red 5 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 Red 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Red 5, you can compare the effects of market volatilities on Falcon Metals and Red 5 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 Red 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Red 5.
Diversification Opportunities for Falcon Metals and Red 5
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Falcon and Red is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Red 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red 5 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 Red 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red 5 has no effect on the direction of Falcon Metals i.e., Falcon Metals and Red 5 go up and down completely randomly.
Pair Corralation between Falcon Metals and Red 5
Assuming the 90 days trading horizon Falcon Metals is expected to generate 2.32 times more return on investment than Red 5. However, Falcon Metals is 2.32 times more volatile than Red 5. It trades about 0.04 of its potential returns per unit of risk. Red 5 is currently generating about 0.02 per unit of risk. If you would invest 14.00 in Falcon Metals on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Falcon Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.2% |
| Values | Daily Returns |
Falcon Metals vs. Red 5
Performance |
| Timeline |
| Falcon Metals |
| Red 5 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Falcon Metals and Red 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Red 5
The main advantage of trading using opposite Falcon Metals and Red 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Red 5 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 Red 5 will offset losses from the drop in Red 5's long position.| Falcon Metals vs. EMvision Medical Devices | Falcon Metals vs. Iron Road | Falcon Metals vs. Charter Hall Education | Falcon Metals vs. Medical Developments International |
| Red 5 vs. Platinum Asset Management | Red 5 vs. Falcon Metals | Red 5 vs. Aurelia Metals | Red 5 vs. Cleanaway Waste 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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