Correlation Between FutureFuel Corp and SPACE
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp and SPACE 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 SPACE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and SPACE, you can compare the effects of market volatilities on FutureFuel Corp and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and SPACE.
Diversification Opportunities for FutureFuel Corp and SPACE
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FutureFuel and SPACE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and SPACE go up and down completely randomly.
Pair Corralation between FutureFuel Corp and SPACE
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to generate 1126.49 times less return on investment than SPACE. But when comparing it to its historical volatility, FutureFuel Corp is 63.97 times less risky than SPACE. It trades about 0.01 of its potential returns per unit of risk. SPACE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.00 in SPACE on September 3, 2024 and sell it today you would earn a total of 59.00 from holding SPACE or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 61.82% |
| Values | Daily Returns |
FutureFuel Corp vs. SPACE
Performance |
| Timeline |
| FutureFuel Corp |
| SPACE |
FutureFuel Corp and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and SPACE
The main advantage of trading using opposite FutureFuel Corp and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.| FutureFuel Corp vs. SPACE | FutureFuel Corp vs. Bayview Acquisition Corp | FutureFuel Corp vs. T Rowe Price | FutureFuel Corp vs. Ampleforth |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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