Correlation Between FARO Technologies and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and GREENX METALS 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 GREENX METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and GREENX METALS LTD, you can compare the effects of market volatilities on FARO Technologies and GREENX METALS 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 GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and GREENX METALS.
Diversification Opportunities for FARO Technologies and GREENX METALS
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FARO and GREENX is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD 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 GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of FARO Technologies i.e., FARO Technologies and GREENX METALS go up and down completely randomly.
Pair Corralation between FARO Technologies and GREENX METALS
Assuming the 90 days horizon FARO Technologies is expected to generate 0.43 times more return on investment than GREENX METALS. However, FARO Technologies is 2.35 times less risky than GREENX METALS. It trades about -0.02 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about -0.06 per unit of risk. If you would invest 2,620 in FARO Technologies on September 13, 2024 and sell it today you would lose (40.00) from holding FARO Technologies or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. GREENX METALS LTD
Performance |
| Timeline |
| FARO Technologies |
| GREENX METALS LTD |
FARO Technologies and GREENX METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and GREENX METALS
The main advantage of trading using opposite FARO Technologies and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, GREENX METALS 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 GREENX METALS will offset losses from the drop in GREENX METALS'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 |
| GREENX METALS vs. Superior Plus Corp | GREENX METALS vs. SIVERS SEMICONDUCTORS AB | GREENX METALS vs. Norsk Hydro ASA | GREENX METALS vs. Reliance Steel Aluminum |
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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