Correlation Between FutureFuel Corp and Linde Plc
Can any of the company-specific risk be diversified away by investing in both FutureFuel Corp and Linde Plc 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 Linde Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FutureFuel Corp and Linde plc Ordinary, you can compare the effects of market volatilities on FutureFuel Corp and Linde Plc 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 Linde Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of FutureFuel Corp and Linde Plc.
Diversification Opportunities for FutureFuel Corp and Linde Plc
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FutureFuel and Linde is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FutureFuel Corp and Linde plc Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc Ordinary 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 Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc Ordinary has no effect on the direction of FutureFuel Corp i.e., FutureFuel Corp and Linde Plc go up and down completely randomly.
Pair Corralation between FutureFuel Corp and Linde Plc
Allowing for the 90-day total investment horizon FutureFuel Corp is expected to under-perform the Linde Plc. In addition to that, FutureFuel Corp is 3.8 times more volatile than Linde plc Ordinary. It trades about -0.15 of its total potential returns per unit of risk. Linde plc Ordinary is currently generating about -0.14 per unit of volatility. If you would invest 47,340 in Linde plc Ordinary on August 31, 2024 and sell it today you would lose (1,628) from holding Linde plc Ordinary or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FutureFuel Corp vs. Linde plc Ordinary
Performance |
| Timeline |
| FutureFuel Corp |
| Linde plc Ordinary |
FutureFuel Corp and Linde Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FutureFuel Corp and Linde Plc
The main advantage of trading using opposite FutureFuel Corp and Linde Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FutureFuel Corp position performs unexpectedly, Linde Plc 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 Linde Plc will offset losses from the drop in Linde Plc's long position.| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. Quaker Chemical | FutureFuel Corp vs. Ecovyst | FutureFuel Corp vs. Minerals Technologies |
| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |