Correlation Between FutureFuel Corp and H B
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp and H B 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 FutureFuel Corp and H B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and H B Fuller, you can compare the effects of market volatilities on FutureFuel Corp and H B 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 FutureFuel Corp with a short position of H B. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and H B.
Diversification Opportunities for FutureFuel Corp and H B
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FutureFuel and FUL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and H B Fuller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H B Fuller and FutureFuel Corp 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 FutureFuel Corp are associated (or correlated) with H B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H B Fuller has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and H B go up and down completely randomly.
Pair Corralation between FutureFuel Corp and H B
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to under-perform the H B. In addition to that, FutureFuel Corp is 2.22 times more volatile than H B Fuller. It trades about -0.18 of its total potential returns per unit of risk. H B Fuller is currently generating about 0.1 per unit of volatility. If you would invest 7,534 in H B Fuller on August 28, 2024 and sell it today you would earn a total of 265.00 from holding H B Fuller or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FutureFuel Corp vs. H B Fuller
Performance |
| Timeline |
| FutureFuel Corp |
| H B Fuller |
FutureFuel Corp and H B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and H B
The main advantage of trading using opposite FutureFuel Corp and H B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp position performs unexpectedly, H B 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 H B will offset losses from the drop in H B's long position.| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. H B Fuller | FutureFuel Corp vs. Northern Technologies | FutureFuel Corp vs. Cabot |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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