Correlation Between Falcon Oil and VF Corp
Can any of the company-specific risk be diversified away by investing in both Falcon Oil and VF Corp 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 Falcon Oil and VF Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Oil Gas and VF Corp, you can compare the effects of market volatilities on Falcon Oil and VF Corp 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 Falcon Oil with a short position of VF Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and VF Corp.
Diversification Opportunities for Falcon Oil and VF Corp
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Falcon and 0R30 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and VF Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corp and Falcon Oil 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 Falcon Oil Gas are associated (or correlated) with VF Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corp has no effect on the direction of Falcon Oil i.e., Falcon Oil and VF Corp go up and down completely randomly.
Pair Corralation between Falcon Oil and VF Corp
Assuming the 90 days trading horizon Falcon Oil Gas is expected to under-perform the VF Corp. But the stock apears to be less risky and, when comparing its historical volatility, Falcon Oil Gas is 2.12 times less risky than VF Corp. The stock trades about -0.2 of its potential returns per unit of risk. The VF Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,720 in VF Corp on September 23, 2024 and sell it today you would earn a total of 509.00 from holding VF Corp or generate 29.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Oil Gas vs. VF Corp
Performance |
| Timeline |
| Falcon Oil Gas |
| VF Corp |
Falcon Oil and VF Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Oil and VF Corp
The main advantage of trading using opposite Falcon Oil and VF Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Oil position performs unexpectedly, VF Corp 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 VF Corp will offset losses from the drop in VF Corp's long position.| Falcon Oil vs. Zegona Communications Plc | Falcon Oil vs. Westlake Chemical Corp | Falcon Oil vs. Wizz Air Holdings | Falcon Oil vs. Batm Advanced Communications |
| VF Corp vs. Uniper SE | VF Corp vs. Mulberry Group PLC | VF Corp vs. London Security Plc | VF Corp vs. Triad Group PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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