Correlation Between FARO Technologies and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and Heartland Financial 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 FARO Technologies and Heartland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Heartland Financial USA, you can compare the effects of market volatilities on FARO Technologies and Heartland Financial 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 FARO Technologies with a short position of Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Heartland Financial.
Diversification Opportunities for FARO Technologies and Heartland Financial
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FARO and Heartland is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA and FARO Technologies 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 FARO Technologies are associated (or correlated) with Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of FARO Technologies i.e., FARO Technologies and Heartland Financial go up and down completely randomly.
Pair Corralation between FARO Technologies and Heartland Financial
Assuming the 90 days horizon FARO Technologies is expected to generate 2.14 times more return on investment than Heartland Financial. However, FARO Technologies is 2.14 times more volatile than Heartland Financial USA. It trades about 0.18 of its potential returns per unit of risk. Heartland Financial USA is currently generating about 0.21 per unit of risk. If you would invest 1,560 in FARO Technologies on September 12, 2024 and sell it today you would earn a total of 1,020 from holding FARO Technologies or generate 65.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
FARO Technologies vs. Heartland Financial USA
Performance |
| Timeline |
| FARO Technologies |
| Heartland Financial USA |
FARO Technologies and Heartland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Heartland Financial
The main advantage of trading using opposite FARO Technologies and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, Heartland Financial 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 Heartland Financial will offset losses from the drop in Heartland Financial's long position.| FARO Technologies vs. HEXAGON AB ADR1 | FARO Technologies vs. Superior Plus Corp | FARO Technologies vs. SIVERS SEMICONDUCTORS AB | FARO Technologies vs. NorAm Drilling AS |
| Heartland Financial vs. Sixt Leasing SE | Heartland Financial vs. CarsalesCom | Heartland Financial vs. United Rentals | Heartland Financial vs. Commercial Vehicle Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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