Correlation Between Falcon Energy and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Algoma Steel 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 Falcon Energy and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Algoma Steel Group, you can compare the effects of market volatilities on Falcon Energy and Algoma Steel 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 Falcon Energy with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Algoma Steel.
Diversification Opportunities for Falcon Energy and Algoma Steel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Algoma is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Falcon Energy i.e., Falcon Energy and Algoma Steel go up and down completely randomly.
Pair Corralation between Falcon Energy and Algoma Steel
Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 1.74 times more return on investment than Algoma Steel. However, Falcon Energy is 1.74 times more volatile than Algoma Steel Group. It trades about -0.06 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.43 per unit of risk. If you would invest 60.00 in Falcon Energy Materials on November 27, 2024 and sell it today you would lose (3.00) from holding Falcon Energy Materials or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Algoma Steel Group
Performance |
| Timeline |
| Falcon Energy Materials |
| Algoma Steel Group |
Falcon Energy and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Algoma Steel
The main advantage of trading using opposite Falcon Energy and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Falcon Energy vs. Canaf Investments | Falcon Energy vs. Medical Facilities | Falcon Energy vs. Solid Impact Investments | Falcon Energy vs. E L Financial 3 |
| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Champion Iron | Algoma Steel vs. Ero Copper Corp | Algoma Steel vs. West Fraser Timber |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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