Correlation Between FMC and Superior Plus
Can any of the company-specific risk be diversified away by investing in both FMC and Superior Plus 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 FMC and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FMC Corporation and Superior Plus Corp, you can compare the effects of market volatilities on FMC and Superior Plus 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 FMC with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC and Superior Plus.
Diversification Opportunities for FMC and Superior Plus
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FMC and Superior is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and FMC 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 FMC Corporation are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of FMC i.e., FMC and Superior Plus go up and down completely randomly.
Pair Corralation between FMC and Superior Plus
Assuming the 90 days horizon FMC Corporation is expected to generate 1.15 times more return on investment than Superior Plus. However, FMC is 1.15 times more volatile than Superior Plus Corp. It trades about 0.02 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.04 per unit of risk. If you would invest 5,210 in FMC Corporation on September 12, 2024 and sell it today you would earn a total of 284.00 from holding FMC Corporation or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FMC Corp. vs. Superior Plus Corp
Performance |
| Timeline |
| FMC Corporation |
| Superior Plus Corp |
FMC and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FMC and Superior Plus
The main advantage of trading using opposite FMC and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMC position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| FMC vs. Superior Plus Corp | FMC vs. SIVERS SEMICONDUCTORS AB | FMC vs. NorAm Drilling AS | FMC vs. Norsk Hydro ASA |
| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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