Correlation Between Fountain and Sofina Socit
Can any of the company-specific risk be diversified away by investing in both Fountain and Sofina Socit 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 Fountain and Sofina Socit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fountain and Sofina Socit Anonyme, you can compare the effects of market volatilities on Fountain and Sofina Socit 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 Fountain with a short position of Sofina Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fountain and Sofina Socit.
Diversification Opportunities for Fountain and Sofina Socit
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fountain and Sofina is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fountain and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme and Fountain 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 Fountain are associated (or correlated) with Sofina Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of Fountain i.e., Fountain and Sofina Socit go up and down completely randomly.
Pair Corralation between Fountain and Sofina Socit
Assuming the 90 days trading horizon Fountain is expected to under-perform the Sofina Socit. In addition to that, Fountain is 1.94 times more volatile than Sofina Socit Anonyme. It trades about -0.09 of its total potential returns per unit of risk. Sofina Socit Anonyme is currently generating about -0.07 per unit of volatility. If you would invest 22,460 in Sofina Socit Anonyme on September 1, 2024 and sell it today you would lose (500.00) from holding Sofina Socit Anonyme or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fountain vs. Sofina Socit Anonyme
Performance |
| Timeline |
| Fountain |
| Sofina Socit Anonyme |
Fountain and Sofina Socit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fountain and Sofina Socit
The main advantage of trading using opposite Fountain and Sofina Socit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fountain position performs unexpectedly, Sofina Socit 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 Sofina Socit will offset losses from the drop in Sofina Socit's long position.The idea behind Fountain and Sofina Socit Anonyme pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sofina Socit vs. Vastned Retail Belgium | Sofina Socit vs. Shurgard Self Storage | Sofina Socit vs. EVS Broadcast Equipment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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