Correlation Between FIPP SA and Crosswood
Can any of the company-specific risk be diversified away by investing in both FIPP SA and Crosswood 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 FIPP SA and Crosswood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIPP SA and Crosswood, you can compare the effects of market volatilities on FIPP SA and Crosswood 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 FIPP SA with a short position of Crosswood. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIPP SA and Crosswood.
Diversification Opportunities for FIPP SA and Crosswood
Very weak diversification
The 3 months correlation between FIPP and Crosswood is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FIPP SA and Crosswood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crosswood and FIPP SA 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 FIPP SA are associated (or correlated) with Crosswood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crosswood has no effect on the direction of FIPP SA i.e., FIPP SA and Crosswood go up and down completely randomly.
Pair Corralation between FIPP SA and Crosswood
Assuming the 90 days trading horizon FIPP SA is expected to generate 0.72 times more return on investment than Crosswood. However, FIPP SA is 1.4 times less risky than Crosswood. It trades about 0.01 of its potential returns per unit of risk. Crosswood is currently generating about 0.01 per unit of risk. If you would invest 14.00 in FIPP SA on August 29, 2024 and sell it today you would earn a total of 0.00 from holding FIPP SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIPP SA vs. Crosswood
Performance |
| Timeline |
| FIPP SA |
| Crosswood |
FIPP SA and Crosswood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIPP SA and Crosswood
The main advantage of trading using opposite FIPP SA and Crosswood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIPP SA position performs unexpectedly, Crosswood 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 Crosswood will offset losses from the drop in Crosswood's long position.The idea behind FIPP SA and Crosswood pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Crosswood vs. Axway Software | Crosswood vs. Metalliance SA | Crosswood vs. Jacquet Metal Service | Crosswood vs. Linedata Services SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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