Correlation Between Falcon Energy and Dream Office
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Dream Office 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 Dream Office 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 Dream Office Real, you can compare the effects of market volatilities on Falcon Energy and Dream Office 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 Dream Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Dream Office.
Diversification Opportunities for Falcon Energy and Dream Office
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Dream is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Dream Office Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Office Real 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 Dream Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Office Real has no effect on the direction of Falcon Energy i.e., Falcon Energy and Dream Office go up and down completely randomly.
Pair Corralation between Falcon Energy and Dream Office
Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 1.4 times more return on investment than Dream Office. However, Falcon Energy is 1.4 times more volatile than Dream Office Real. It trades about 0.02 of its potential returns per unit of risk. Dream Office Real is currently generating about -0.05 per unit of risk. If you would invest 79.00 in Falcon Energy Materials on September 2, 2024 and sell it today you would earn a total of 6.00 from holding Falcon Energy Materials or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Dream Office Real
Performance |
| Timeline |
| Falcon Energy Materials |
| Dream Office Real |
Falcon Energy and Dream Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Dream Office
The main advantage of trading using opposite Falcon Energy and Dream Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Dream Office 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 Dream Office will offset losses from the drop in Dream Office's long position.| Falcon Energy vs. Brookfield Office Properties | Falcon Energy vs. TGS Esports | Falcon Energy vs. Costco Wholesale Corp | Falcon Energy vs. Canlan Ice Sports |
| Dream Office vs. Artis Real Estate | Dream Office vs. Boardwalk Real Estate | Dream Office vs. Allied Properties Real | Dream Office vs. HR Real Estate |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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