Correlation Between Falcon Energy and High Liner
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and High Liner 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 High Liner 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 High Liner Foods, you can compare the effects of market volatilities on Falcon Energy and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and High Liner.
Diversification Opportunities for Falcon Energy and High Liner
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Falcon and High is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Falcon Energy i.e., Falcon Energy and High Liner go up and down completely randomly.
Pair Corralation between Falcon Energy and High Liner
Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 2.42 times more return on investment than High Liner. However, Falcon Energy is 2.42 times more volatile than High Liner Foods. It trades about 0.28 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.37 per unit of risk. If you would invest 69.00 in Falcon Energy Materials on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Falcon Energy Materials or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. High Liner Foods
Performance |
| Timeline |
| Falcon Energy Materials |
| High Liner Foods |
Falcon Energy and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and High Liner
The main advantage of trading using opposite Falcon Energy and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Falcon Energy vs. NeXGold Mining Corp | Falcon Energy vs. US Financial 15 | Falcon Energy vs. Metalero Mining Corp | Falcon Energy vs. CI Financial Corp |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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