Correlation Between FARO Technologies and Nintendo
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and Nintendo 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 Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Nintendo Co, you can compare the effects of market volatilities on FARO Technologies and Nintendo 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 Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Nintendo.
Diversification Opportunities for FARO Technologies and Nintendo
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FARO and Nintendo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of FARO Technologies i.e., FARO Technologies and Nintendo go up and down completely randomly.
Pair Corralation between FARO Technologies and Nintendo
Assuming the 90 days horizon FARO Technologies is expected to generate 2.51 times more return on investment than Nintendo. However, FARO Technologies is 2.51 times more volatile than Nintendo Co. It trades about 0.09 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.04 per unit of risk. If you would invest 1,610 in FARO Technologies on September 3, 2024 and sell it today you would earn a total of 870.00 from holding FARO Technologies or generate 54.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. Nintendo Co
Performance |
| Timeline |
| FARO Technologies |
| Nintendo |
FARO Technologies and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Nintendo
The main advantage of trading using opposite FARO Technologies and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| FARO Technologies vs. BE Semiconductor Industries | FARO Technologies vs. Zijin Mining Group | FARO Technologies vs. Perseus Mining Limited | FARO Technologies vs. Magnachip Semiconductor |
| Nintendo vs. AOI Electronics Co | Nintendo vs. ARROW ELECTRONICS | Nintendo vs. BYD ELECTRONIC | Nintendo vs. Arrow Electronics |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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