Correlation Between Floridienne and Fountain
Can any of the company-specific risk be diversified away by investing in both Floridienne and Fountain 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 Floridienne and Fountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floridienne and Fountain, you can compare the effects of market volatilities on Floridienne and Fountain 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 Floridienne with a short position of Fountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floridienne and Fountain.
Diversification Opportunities for Floridienne and Fountain
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floridienne and Fountain is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Floridienne and Fountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fountain and Floridienne 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 Floridienne are associated (or correlated) with Fountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fountain has no effect on the direction of Floridienne i.e., Floridienne and Fountain go up and down completely randomly.
Pair Corralation between Floridienne and Fountain
Assuming the 90 days trading horizon Floridienne is expected to under-perform the Fountain. But the stock apears to be less risky and, when comparing its historical volatility, Floridienne is 1.83 times less risky than Fountain. The stock trades about -0.03 of its potential returns per unit of risk. The Fountain is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Fountain on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Fountain or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Floridienne vs. Fountain
Performance |
| Timeline |
| Floridienne |
| Fountain |
Floridienne and Fountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floridienne and Fountain
The main advantage of trading using opposite Floridienne and Fountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floridienne position performs unexpectedly, Fountain 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 Fountain will offset losses from the drop in Fountain's long position.| Floridienne vs. Brederode SA | Floridienne vs. Compagnie du Bois | Floridienne vs. Ackermans Van Haaren | Floridienne vs. Sofina Socit Anonyme |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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