Correlation Between ForFarmers and TomTom NV
Can any of the company-specific risk be diversified away by investing in both ForFarmers and TomTom NV 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 ForFarmers and TomTom NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ForFarmers NV and TomTom NV, you can compare the effects of market volatilities on ForFarmers and TomTom NV 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 ForFarmers with a short position of TomTom NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of ForFarmers and TomTom NV.
Diversification Opportunities for ForFarmers and TomTom NV
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ForFarmers and TomTom is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and TomTom NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomTom NV and ForFarmers 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 ForFarmers NV are associated (or correlated) with TomTom NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomTom NV has no effect on the direction of ForFarmers i.e., ForFarmers and TomTom NV go up and down completely randomly.
Pair Corralation between ForFarmers and TomTom NV
Assuming the 90 days trading horizon ForFarmers NV is expected to generate 0.66 times more return on investment than TomTom NV. However, ForFarmers NV is 1.5 times less risky than TomTom NV. It trades about 0.08 of its potential returns per unit of risk. TomTom NV is currently generating about -0.02 per unit of risk. If you would invest 280.00 in ForFarmers NV on September 1, 2024 and sell it today you would earn a total of 43.00 from holding ForFarmers NV or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.24% |
| Values | Daily Returns |
ForFarmers NV vs. TomTom NV
Performance |
| Timeline |
| ForFarmers NV |
| TomTom NV |
ForFarmers and TomTom NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ForFarmers and TomTom NV
The main advantage of trading using opposite ForFarmers and TomTom NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ForFarmers position performs unexpectedly, TomTom NV 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 TomTom NV will offset losses from the drop in TomTom NV's long position.| ForFarmers vs. TKH Group NV | ForFarmers vs. Brunel International NV | ForFarmers vs. Koninklijke BAM Groep | ForFarmers vs. Koninklijke Vopak NV |
| TomTom NV vs. ForFarmers NV | TomTom NV vs. Sligro Food Group | TomTom NV vs. Amsterdam Commodities NV | TomTom NV vs. Brunel International 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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