Correlation Between Fleury SA and Baxter International
Can any of the company-specific risk be diversified away by investing in both Fleury SA and Baxter International 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 Fleury SA and Baxter International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fleury SA and Baxter International, you can compare the effects of market volatilities on Fleury SA and Baxter International 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 Fleury SA with a short position of Baxter International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fleury SA and Baxter International.
Diversification Opportunities for Fleury SA and Baxter International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fleury and Baxter is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fleury SA and Baxter International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baxter International and Fleury SA 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 Fleury SA are associated (or correlated) with Baxter International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baxter International has no effect on the direction of Fleury SA i.e., Fleury SA and Baxter International go up and down completely randomly.
Pair Corralation between Fleury SA and Baxter International
Assuming the 90 days trading horizon Fleury SA is expected to under-perform the Baxter International. In addition to that, Fleury SA is 1.13 times more volatile than Baxter International. It trades about -0.18 of its total potential returns per unit of risk. Baxter International is currently generating about -0.17 per unit of volatility. If you would invest 10,400 in Baxter International on August 30, 2024 and sell it today you would lose (670.00) from holding Baxter International or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Fleury SA vs. Baxter International
Performance |
| Timeline |
| Fleury SA |
| Baxter International |
Fleury SA and Baxter International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fleury SA and Baxter International
The main advantage of trading using opposite Fleury SA and Baxter International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fleury SA position performs unexpectedly, Baxter International 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 Baxter International will offset losses from the drop in Baxter International's long position.| Fleury SA vs. Engie Brasil Energia | Fleury SA vs. WEG SA | Fleury SA vs. Ambev SA | Fleury SA vs. M Dias Branco |
| Baxter International vs. Fleury SA | Baxter International vs. Baumer SA | Baxter International vs. Energisa SA | Baxter International vs. BTG Pactual Logstica |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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