Correlation Between Flexible Solutions and Mosaic
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Mosaic 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 Flexible Solutions and Mosaic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and The Mosaic, you can compare the effects of market volatilities on Flexible Solutions and Mosaic 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 Flexible Solutions with a short position of Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Mosaic.
Diversification Opportunities for Flexible Solutions and Mosaic
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flexible and Mosaic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Mosaic go up and down completely randomly.
Pair Corralation between Flexible Solutions and Mosaic
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 1.79 times more return on investment than Mosaic. However, Flexible Solutions is 1.79 times more volatile than The Mosaic. It trades about 0.01 of its potential returns per unit of risk. The Mosaic is currently generating about -0.04 per unit of risk. If you would invest 405.00 in Flexible Solutions International on September 4, 2024 and sell it today you would lose (6.00) from holding Flexible Solutions International or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. The Mosaic
Performance |
| Timeline |
| Flexible Solutions |
| Mosaic |
Flexible Solutions and Mosaic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Mosaic
The main advantage of trading using opposite Flexible Solutions and Mosaic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Mosaic 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 Mosaic will offset losses from the drop in Mosaic's long position.| Flexible Solutions vs. Innospec | Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Quaker Chemical |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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