Correlation Between Fulcrum Metals and BAE Systems
Can any of the company-specific risk be diversified away by investing in both Fulcrum Metals and BAE Systems 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 Fulcrum Metals and BAE Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulcrum Metals PLC and BAE Systems plc, you can compare the effects of market volatilities on Fulcrum Metals and BAE Systems 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 Fulcrum Metals with a short position of BAE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Metals and BAE Systems.
Diversification Opportunities for Fulcrum Metals and BAE Systems
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fulcrum and BAE is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Metals PLC and BAE Systems plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems plc and Fulcrum Metals 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 Fulcrum Metals PLC are associated (or correlated) with BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems plc has no effect on the direction of Fulcrum Metals i.e., Fulcrum Metals and BAE Systems go up and down completely randomly.
Pair Corralation between Fulcrum Metals and BAE Systems
Assuming the 90 days trading horizon Fulcrum Metals PLC is expected to under-perform the BAE Systems. In addition to that, Fulcrum Metals is 1.45 times more volatile than BAE Systems plc. It trades about -0.09 of its total potential returns per unit of risk. BAE Systems plc is currently generating about 0.07 per unit of volatility. If you would invest 78,990 in BAE Systems plc on September 2, 2024 and sell it today you would earn a total of 43,710 from holding BAE Systems plc or generate 55.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.02% |
| Values | Daily Returns |
Fulcrum Metals PLC vs. BAE Systems plc
Performance |
| Timeline |
| Fulcrum Metals PLC |
| BAE Systems plc |
Fulcrum Metals and BAE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulcrum Metals and BAE Systems
The main advantage of trading using opposite Fulcrum Metals and BAE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Metals position performs unexpectedly, BAE Systems 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 BAE Systems will offset losses from the drop in BAE Systems' long position.| Fulcrum Metals vs. Sparebank 1 SR | Fulcrum Metals vs. Synchrony Financial | Fulcrum Metals vs. MT Bank Corp | Fulcrum Metals vs. The Mercantile Investment |
| BAE Systems vs. Roper Technologies | BAE Systems vs. Automatic Data Processing | BAE Systems vs. Vitec Software Group | BAE Systems vs. Uber Technologies |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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