Correlation Between FAM and Elysee Development
Can any of the company-specific risk be diversified away by investing in both FAM and Elysee Development 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 FAM and Elysee Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAM and Elysee Development Corp, you can compare the effects of market volatilities on FAM and Elysee Development 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 FAM with a short position of Elysee Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAM and Elysee Development.
Diversification Opportunities for FAM and Elysee Development
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FAM and Elysee is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FAM and Elysee Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elysee Development Corp and FAM 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 FAM are associated (or correlated) with Elysee Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elysee Development Corp has no effect on the direction of FAM i.e., FAM and Elysee Development go up and down completely randomly.
Pair Corralation between FAM and Elysee Development
Considering the 90-day investment horizon FAM is expected to generate 0.13 times more return on investment than Elysee Development. However, FAM is 7.75 times less risky than Elysee Development. It trades about 0.14 of its potential returns per unit of risk. Elysee Development Corp is currently generating about 0.01 per unit of risk. If you would invest 529.00 in FAM on September 1, 2024 and sell it today you would earn a total of 145.00 from holding FAM or generate 27.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.45% |
| Values | Daily Returns |
FAM vs. Elysee Development Corp
Performance |
| Timeline |
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Elysee Development Corp |
FAM and Elysee Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAM and Elysee Development
The main advantage of trading using opposite FAM and Elysee Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAM position performs unexpectedly, Elysee Development 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 Elysee Development will offset losses from the drop in Elysee Development's long position.| FAM vs. Blackstone Gso Long | FAM vs. Blackstone Gso Senior | FAM vs. Nuveen Floating Rate | FAM vs. Pioneer Floating Rate |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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