Correlation Between Falcon Metals and Step One
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Step One 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 Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Step One Clothing, you can compare the effects of market volatilities on Falcon Metals and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Step One.
Diversification Opportunities for Falcon Metals and Step One
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Falcon and Step is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Falcon Metals i.e., Falcon Metals and Step One go up and down completely randomly.
Pair Corralation between Falcon Metals and Step One
Assuming the 90 days trading horizon Falcon Metals is expected to generate 2.08 times more return on investment than Step One. However, Falcon Metals is 2.08 times more volatile than Step One Clothing. It trades about 0.04 of its potential returns per unit of risk. Step One Clothing is currently generating about -0.02 per unit of risk. If you would invest 13.00 in Falcon Metals on September 20, 2024 and sell it today you would earn a total of 1.00 from holding Falcon Metals or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Step One Clothing
Performance |
| Timeline |
| Falcon Metals |
| Step One Clothing |
Falcon Metals and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Step One
The main advantage of trading using opposite Falcon Metals and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Falcon Metals vs. Catalyst Metals | Falcon Metals vs. Retail Food Group | Falcon Metals vs. Aeon Metals | Falcon Metals vs. Beston Global Food |
| Step One vs. MetalsGrove Mining | Step One vs. Sky Metals | Step One vs. Falcon Metals | Step One vs. Retail Food Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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