Correlation Between Fuji Electric and Preformed Line
Can any of the company-specific risk be diversified away by investing in both Fuji Electric and Preformed Line 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 Fuji Electric and Preformed Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuji Electric Co and Preformed Line Products, you can compare the effects of market volatilities on Fuji Electric and Preformed Line 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 Fuji Electric with a short position of Preformed Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuji Electric and Preformed Line.
Diversification Opportunities for Fuji Electric and Preformed Line
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fuji and Preformed is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Electric Co and Preformed Line Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preformed Line Products and Fuji Electric 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 Fuji Electric Co are associated (or correlated) with Preformed Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preformed Line Products has no effect on the direction of Fuji Electric i.e., Fuji Electric and Preformed Line go up and down completely randomly.
Pair Corralation between Fuji Electric and Preformed Line
Assuming the 90 days horizon Fuji Electric is expected to generate 1.44 times less return on investment than Preformed Line. But when comparing it to its historical volatility, Fuji Electric Co is 1.34 times less risky than Preformed Line. It trades about 0.04 of its potential returns per unit of risk. Preformed Line Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,125 in Preformed Line Products on August 28, 2024 and sell it today you would earn a total of 4,640 from holding Preformed Line Products or generate 50.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuji Electric Co vs. Preformed Line Products
Performance |
| Timeline |
| Fuji Electric |
| Preformed Line Products |
Fuji Electric and Preformed Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuji Electric and Preformed Line
The main advantage of trading using opposite Fuji Electric and Preformed Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuji Electric position performs unexpectedly, Preformed Line 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 Preformed Line will offset losses from the drop in Preformed Line's long position.| Fuji Electric vs. FREYR Battery SA | Fuji Electric vs. nVent Electric PLC | Fuji Electric vs. Hubbell | Fuji Electric vs. Advanced Energy Industries |
| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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