Correlation Between Ferguson Plc and OFX Group
Can any of the company-specific risk be diversified away by investing in both Ferguson Plc and OFX Group 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 Ferguson Plc and OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferguson Plc and OFX Group Ltd, you can compare the effects of market volatilities on Ferguson Plc and OFX Group 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 Ferguson Plc with a short position of OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferguson Plc and OFX Group.
Diversification Opportunities for Ferguson Plc and OFX Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ferguson and OFX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ferguson Plc and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group and Ferguson Plc 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 Ferguson Plc are associated (or correlated) with OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Ferguson Plc i.e., Ferguson Plc and OFX Group go up and down completely randomly.
Pair Corralation between Ferguson Plc and OFX Group
Given the investment horizon of 90 days Ferguson Plc is expected to generate 0.31 times more return on investment than OFX Group. However, Ferguson Plc is 3.27 times less risky than OFX Group. It trades about -0.32 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.22 per unit of risk. If you would invest 21,498 in Ferguson Plc on September 24, 2024 and sell it today you would lose (3,848) from holding Ferguson Plc or give up 17.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ferguson Plc vs. OFX Group Ltd
Performance |
| Timeline |
| Ferguson Plc |
| OFX Group |
Ferguson Plc and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferguson Plc and OFX Group
The main advantage of trading using opposite Ferguson Plc and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferguson Plc position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.| Ferguson Plc vs. SiteOne Landscape Supply | Ferguson Plc vs. WW Grainger | Ferguson Plc vs. Pool Corporation | Ferguson Plc vs. MSC Industrial Direct |
| OFX Group vs. Watsco Inc | OFX Group vs. Fastenal Company | OFX Group vs. SiteOne Landscape Supply | OFX Group vs. Ferguson Plc |
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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