Correlation Between Flow Traders and ForFarmers
Can any of the company-specific risk be diversified away by investing in both Flow Traders and ForFarmers 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 Flow Traders and ForFarmers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Traders BV and ForFarmers NV, you can compare the effects of market volatilities on Flow Traders and ForFarmers 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 Flow Traders with a short position of ForFarmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and ForFarmers.
Diversification Opportunities for Flow Traders and ForFarmers
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flow and ForFarmers is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders BV and ForFarmers NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ForFarmers NV and Flow Traders 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 Flow Traders BV are associated (or correlated) with ForFarmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ForFarmers NV has no effect on the direction of Flow Traders i.e., Flow Traders and ForFarmers go up and down completely randomly.
Pair Corralation between Flow Traders and ForFarmers
Assuming the 90 days trading horizon Flow Traders is expected to generate 1.29 times less return on investment than ForFarmers. In addition to that, Flow Traders is 1.43 times more volatile than ForFarmers NV. It trades about 0.07 of its total potential returns per unit of risk. ForFarmers NV is currently generating about 0.12 per unit of volatility. If you would invest 221.00 in ForFarmers NV on August 29, 2024 and sell it today you would earn a total of 103.00 from holding ForFarmers NV or generate 46.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flow Traders BV vs. ForFarmers NV
Performance |
| Timeline |
| Flow Traders BV |
| ForFarmers NV |
Flow Traders and ForFarmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Traders and ForFarmers
The main advantage of trading using opposite Flow Traders and ForFarmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Traders position performs unexpectedly, ForFarmers 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 ForFarmers will offset losses from the drop in ForFarmers' long position.| Flow Traders vs. NN Group NV | Flow Traders vs. BE Semiconductor Industries | Flow Traders vs. Koninklijke Ahold Delhaize | Flow Traders vs. ASR Nederland NV |
| ForFarmers vs. Koninklijke Heijmans NV | ForFarmers vs. Amsterdam Commodities NV | ForFarmers vs. Flow Traders BV | ForFarmers vs. Koninklijke BAM Groep |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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