Correlation Between Festi Hf and Marel Hf
Can any of the company-specific risk be diversified away by investing in both Festi Hf and Marel Hf 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 Festi Hf and Marel Hf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Festi hf and Marel hf, you can compare the effects of market volatilities on Festi Hf and Marel Hf 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 Festi Hf with a short position of Marel Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Festi Hf and Marel Hf.
Diversification Opportunities for Festi Hf and Marel Hf
Almost no diversification
The 3 months correlation between Festi and Marel is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Festi hf and Marel hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marel hf and Festi Hf 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 Festi hf are associated (or correlated) with Marel Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marel hf has no effect on the direction of Festi Hf i.e., Festi Hf and Marel Hf go up and down completely randomly.
Pair Corralation between Festi Hf and Marel Hf
Assuming the 90 days trading horizon Festi hf is expected to generate 1.32 times more return on investment than Marel Hf. However, Festi Hf is 1.32 times more volatile than Marel hf. It trades about 0.29 of its potential returns per unit of risk. Marel hf is currently generating about 0.28 per unit of risk. If you would invest 20,400 in Festi hf on August 28, 2024 and sell it today you would earn a total of 7,400 from holding Festi hf or generate 36.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Festi hf vs. Marel hf
Performance |
| Timeline |
| Festi hf |
| Marel hf |
Festi Hf and Marel Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Festi Hf and Marel Hf
The main advantage of trading using opposite Festi Hf and Marel Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Festi Hf position performs unexpectedly, Marel Hf 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 Marel Hf will offset losses from the drop in Marel Hf's long position.| Festi Hf vs. Icelandair Group hf | Festi Hf vs. slandsbanki hf | Festi Hf vs. Iceland Seafood International | Festi Hf vs. Alvotech |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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