Correlation Between FARO Technologies and Natures Miracle
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and Natures Miracle 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 FARO Technologies and Natures Miracle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Natures Miracle Holding, you can compare the effects of market volatilities on FARO Technologies and Natures Miracle 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 FARO Technologies with a short position of Natures Miracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Natures Miracle.
Diversification Opportunities for FARO Technologies and Natures Miracle
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FARO and Natures is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding and FARO Technologies 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 FARO Technologies are associated (or correlated) with Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of FARO Technologies i.e., FARO Technologies and Natures Miracle go up and down completely randomly.
Pair Corralation between FARO Technologies and Natures Miracle
Given the investment horizon of 90 days FARO Technologies is expected to generate 0.24 times more return on investment than Natures Miracle. However, FARO Technologies is 4.14 times less risky than Natures Miracle. It trades about 0.23 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about -0.25 per unit of risk. If you would invest 2,563 in FARO Technologies on October 20, 2024 and sell it today you would earn a total of 521.00 from holding FARO Technologies or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. Natures Miracle Holding
Performance |
| Timeline |
| FARO Technologies |
| Natures Miracle Holding |
FARO Technologies and Natures Miracle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Natures Miracle
The main advantage of trading using opposite FARO Technologies and Natures Miracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, Natures Miracle 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 Natures Miracle will offset losses from the drop in Natures Miracle's long position.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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