Correlation Between Flexible Solutions and Pool
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and Pool 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 Pool 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 Pool Corporation, you can compare the effects of market volatilities on Flexible Solutions and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Pool.
Diversification Opportunities for Flexible Solutions and Pool
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Flexible and Pool is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and Pool go up and down completely randomly.
Pair Corralation between Flexible Solutions and Pool
Considering the 90-day investment horizon Flexible Solutions International is expected to under-perform the Pool. In addition to that, Flexible Solutions is 1.97 times more volatile than Pool Corporation. It trades about -0.14 of its total potential returns per unit of risk. Pool Corporation is currently generating about 0.02 per unit of volatility. If you would invest 37,373 in Pool Corporation on September 12, 2024 and sell it today you would earn a total of 175.00 from holding Pool Corporation or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. Pool Corp.
Performance |
| Timeline |
| Flexible Solutions |
| Pool |
Flexible Solutions and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and Pool
The main advantage of trading using opposite Flexible Solutions and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's long position.| Flexible Solutions vs. Orion Engineered Carbons | Flexible Solutions vs. International Flavors Fragrances | Flexible Solutions vs. Sociedad Quimica y | Flexible Solutions vs. Albemarle Corp |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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