Correlation Between Farmhouse and Powerstorm Holdings
Can any of the company-specific risk be diversified away by investing in both Farmhouse and Powerstorm Holdings 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 Farmhouse and Powerstorm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmhouse and Powerstorm Holdings, you can compare the effects of market volatilities on Farmhouse and Powerstorm Holdings 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 Farmhouse with a short position of Powerstorm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmhouse and Powerstorm Holdings.
Diversification Opportunities for Farmhouse and Powerstorm Holdings
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farmhouse and Powerstorm is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Farmhouse and Powerstorm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerstorm Holdings and Farmhouse 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 Farmhouse are associated (or correlated) with Powerstorm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerstorm Holdings has no effect on the direction of Farmhouse i.e., Farmhouse and Powerstorm Holdings go up and down completely randomly.
Pair Corralation between Farmhouse and Powerstorm Holdings
Given the investment horizon of 90 days Farmhouse is expected to generate 2.67 times more return on investment than Powerstorm Holdings. However, Farmhouse is 2.67 times more volatile than Powerstorm Holdings. It trades about 0.11 of its potential returns per unit of risk. Powerstorm Holdings is currently generating about 0.01 per unit of risk. If you would invest 9.90 in Farmhouse on August 29, 2024 and sell it today you would earn a total of 12.10 from holding Farmhouse or generate 122.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmhouse vs. Powerstorm Holdings
Performance |
| Timeline |
| Farmhouse |
| Powerstorm Holdings |
Farmhouse and Powerstorm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmhouse and Powerstorm Holdings
The main advantage of trading using opposite Farmhouse and Powerstorm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmhouse position performs unexpectedly, Powerstorm Holdings 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 Powerstorm Holdings will offset losses from the drop in Powerstorm Holdings' long position.| Farmhouse vs. Powerstorm Holdings | Farmhouse vs. Phonex Inc | Farmhouse vs. Greystone Logistics | Farmhouse vs. Fortran Corp |
| Powerstorm Holdings vs. Novonix Ltd ADR | Powerstorm Holdings vs. Ilika plc | Powerstorm Holdings vs. FuelPositive Corp | Powerstorm Holdings vs. Novonix |
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 CEOs Directory module to screen CEOs from public companies around the world.
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