Correlation Between Futuris and Caldwell Partners
Can any of the company-specific risk be diversified away by investing in both Futuris and Caldwell Partners 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 Futuris and Caldwell Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futuris Company and The Caldwell Partners, you can compare the effects of market volatilities on Futuris and Caldwell Partners 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 Futuris with a short position of Caldwell Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futuris and Caldwell Partners.
Diversification Opportunities for Futuris and Caldwell Partners
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Futuris and Caldwell is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Futuris Company and The Caldwell Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Partners and Futuris 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 Futuris Company are associated (or correlated) with Caldwell Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Partners has no effect on the direction of Futuris i.e., Futuris and Caldwell Partners go up and down completely randomly.
Pair Corralation between Futuris and Caldwell Partners
Given the investment horizon of 90 days Futuris Company is expected to generate 3.26 times more return on investment than Caldwell Partners. However, Futuris is 3.26 times more volatile than The Caldwell Partners. It trades about 0.04 of its potential returns per unit of risk. The Caldwell Partners is currently generating about 0.03 per unit of risk. If you would invest 1.73 in Futuris Company on August 29, 2024 and sell it today you would lose (0.03) from holding Futuris Company or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futuris Company vs. The Caldwell Partners
Performance |
| Timeline |
| Futuris Company |
| Caldwell Partners |
Futuris and Caldwell Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futuris and Caldwell Partners
The main advantage of trading using opposite Futuris and Caldwell Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuris position performs unexpectedly, Caldwell Partners 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 Caldwell Partners will offset losses from the drop in Caldwell Partners' long position.| Futuris vs. Hire Technologies | Futuris vs. Trucept | Futuris vs. Randstad Holdings NV | Futuris vs. The Caldwell Partners |
| Caldwell Partners vs. Deere Company | Caldwell Partners vs. Columbus McKinnon | Caldwell Partners vs. Hyster Yale Materials Handling | Caldwell Partners vs. Manitowoc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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