Correlation Between ForFarmers and U Blox
Can any of the company-specific risk be diversified away by investing in both ForFarmers and U Blox 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 U Blox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ForFarmers NV and U Blox Holding, you can compare the effects of market volatilities on ForFarmers and U Blox 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 U Blox. Check out your portfolio center. Please also check ongoing floating volatility patterns of ForFarmers and U Blox.
Diversification Opportunities for ForFarmers and U Blox
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ForFarmers and UBXN is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and U Blox Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Blox Holding 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 U Blox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Blox Holding has no effect on the direction of ForFarmers i.e., ForFarmers and U Blox go up and down completely randomly.
Pair Corralation between ForFarmers and U Blox
Assuming the 90 days trading horizon ForFarmers NV is expected to generate 0.64 times more return on investment than U Blox. However, ForFarmers NV is 1.56 times less risky than U Blox. It trades about 0.04 of its potential returns per unit of risk. U Blox Holding is currently generating about -0.05 per unit of risk. If you would invest 271.00 in ForFarmers NV on August 31, 2024 and sell it today you would earn a total of 52.00 from holding ForFarmers NV or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.43% |
| Values | Daily Returns |
ForFarmers NV vs. U Blox Holding
Performance |
| Timeline |
| ForFarmers NV |
| U Blox Holding |
ForFarmers and U Blox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ForFarmers and U Blox
The main advantage of trading using opposite ForFarmers and U Blox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ForFarmers position performs unexpectedly, U Blox 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 U Blox will offset losses from the drop in U Blox's long position.| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
| U Blox vs. Jungfraubahn Holding AG | U Blox vs. Amsterdam Commodities NV | U Blox vs. Flow Traders BV | U Blox vs. ForFarmers 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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