Correlation Between Fenbo Holdings and Century Communities
Can any of the company-specific risk be diversified away by investing in both Fenbo Holdings and Century Communities 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 Fenbo Holdings and Century Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fenbo Holdings Limited and Century Communities, you can compare the effects of market volatilities on Fenbo Holdings and Century Communities 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 Fenbo Holdings with a short position of Century Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fenbo Holdings and Century Communities.
Diversification Opportunities for Fenbo Holdings and Century Communities
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fenbo and Century is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fenbo Holdings Limited and Century Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Communities and Fenbo Holdings 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 Fenbo Holdings Limited are associated (or correlated) with Century Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Communities has no effect on the direction of Fenbo Holdings i.e., Fenbo Holdings and Century Communities go up and down completely randomly.
Pair Corralation between Fenbo Holdings and Century Communities
Given the investment horizon of 90 days Fenbo Holdings Limited is expected to under-perform the Century Communities. In addition to that, Fenbo Holdings is 4.79 times more volatile than Century Communities. It trades about -0.07 of its total potential returns per unit of risk. Century Communities is currently generating about 0.04 per unit of volatility. If you would invest 8,259 in Century Communities on August 26, 2024 and sell it today you would earn a total of 610.00 from holding Century Communities or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fenbo Holdings Limited vs. Century Communities
Performance |
| Timeline |
| Fenbo Holdings |
| Century Communities |
Fenbo Holdings and Century Communities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fenbo Holdings and Century Communities
The main advantage of trading using opposite Fenbo Holdings and Century Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fenbo Holdings position performs unexpectedly, Century Communities 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 Century Communities will offset losses from the drop in Century Communities' long position.| Fenbo Holdings vs. KNOT Offshore Partners | Fenbo Holdings vs. Aldel Financial II | Fenbo Holdings vs. Stepstone Group | Fenbo Holdings vs. Tencent Music Entertainment |
| Century Communities vs. Taylor Morn Home | Century Communities vs. Beazer Homes USA | Century Communities vs. Meritage | Century Communities vs. TRI Pointe Homes |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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