Correlation Between FS Energy and Business Development
Can any of the company-specific risk be diversified away by investing in both FS Energy and Business Development 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 FS Energy and Business Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FS Energy and and Business Development Corp, you can compare the effects of market volatilities on FS Energy and Business Development 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 FS Energy with a short position of Business Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of FS Energy and Business Development.
Diversification Opportunities for FS Energy and Business Development
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FSEN and Business is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding FS Energy and and Business Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business Development Corp and FS Energy 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 FS Energy and are associated (or correlated) with Business Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business Development Corp has no effect on the direction of FS Energy i.e., FS Energy and Business Development go up and down completely randomly.
Pair Corralation between FS Energy and Business Development
Given the investment horizon of 90 days FS Energy and is expected to generate 499.75 times more return on investment than Business Development. However, FS Energy is 499.75 times more volatile than Business Development Corp. It trades about 0.05 of its potential returns per unit of risk. Business Development Corp is currently generating about 0.21 per unit of risk. If you would invest 250.00 in FS Energy and on August 24, 2024 and sell it today you would earn a total of 0.00 from holding FS Energy and or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
FS Energy and vs. Business Development Corp
Performance |
| Timeline |
| FS Energy |
| Business Development Corp |
FS Energy and Business Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FS Energy and Business Development
The main advantage of trading using opposite FS Energy and Business Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FS Energy position performs unexpectedly, Business Development 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 Business Development will offset losses from the drop in Business Development's long position.| FS Energy vs. Business Development Corp | FS Energy vs. Inpex Corp ADR | FS Energy vs. Daikin IndustriesLtd |
| Business Development vs. Ameritrans Capital Corp | Business Development vs. Bounce Mobile Systems | Business Development vs. Elysee Development Corp | Business Development vs. AGF Management Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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