Correlation Between Flare and ABL
Can any of the company-specific risk be diversified away by investing in both Flare and ABL 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 Flare and ABL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flare and ABL, you can compare the effects of market volatilities on Flare and ABL 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 Flare with a short position of ABL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flare and ABL.
Diversification Opportunities for Flare and ABL
Weak diversification
The 3 months correlation between Flare and ABL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flare and ABL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL and Flare 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 Flare are associated (or correlated) with ABL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL has no effect on the direction of Flare i.e., Flare and ABL go up and down completely randomly.
Pair Corralation between Flare and ABL
If you would invest 1.24 in Flare on September 4, 2024 and sell it today you would earn a total of 2.26 from holding Flare or generate 182.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Flare vs. ABL
Performance |
| Timeline |
| Flare |
| ABL |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Flare and ABL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flare and ABL
The main advantage of trading using opposite Flare and ABL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flare position performs unexpectedly, ABL 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 ABL will offset losses from the drop in ABL's long position.The idea behind Flare and ABL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |