Correlation Between Farm Pride and Truscott Mining
Can any of the company-specific risk be diversified away by investing in both Farm Pride and Truscott Mining 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 Farm Pride and Truscott Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farm Pride Foods and Truscott Mining Corp, you can compare the effects of market volatilities on Farm Pride and Truscott Mining 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 Farm Pride with a short position of Truscott Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Truscott Mining.
Diversification Opportunities for Farm Pride and Truscott Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Farm and Truscott is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods and Truscott Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truscott Mining Corp and Farm Pride 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 Farm Pride Foods are associated (or correlated) with Truscott Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truscott Mining Corp has no effect on the direction of Farm Pride i.e., Farm Pride and Truscott Mining go up and down completely randomly.
Pair Corralation between Farm Pride and Truscott Mining
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 2.16 times more return on investment than Truscott Mining. However, Farm Pride is 2.16 times more volatile than Truscott Mining Corp. It trades about 0.12 of its potential returns per unit of risk. Truscott Mining Corp is currently generating about 0.01 per unit of risk. If you would invest 12.00 in Farm Pride Foods on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Farm Pride Foods or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farm Pride Foods vs. Truscott Mining Corp
Performance |
| Timeline |
| Farm Pride Foods |
| Truscott Mining Corp |
Farm Pride and Truscott Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farm Pride and Truscott Mining
The main advantage of trading using opposite Farm Pride and Truscott Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride position performs unexpectedly, Truscott Mining 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 Truscott Mining will offset losses from the drop in Truscott Mining's long position.| Farm Pride vs. BKI Investment | Farm Pride vs. Navigator Global Investments | Farm Pride vs. Hudson Investment Group | Farm Pride vs. Diversified United Investment |
| Truscott Mining vs. Perseus Mining | Truscott Mining vs. DMC Mining | Truscott Mining vs. Peel Mining | Truscott Mining vs. Pinnacle Investment Management |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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