Correlation Between US Financial and A W
Can any of the company-specific risk be diversified away by investing in both US Financial and A W 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 US Financial and A W into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and A W FOOD, you can compare the effects of market volatilities on US Financial and A W 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 US Financial with a short position of A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and A W.
Diversification Opportunities for US Financial and A W
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FTU-PB and A W is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD and US Financial 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 US Financial 15 are associated (or correlated) with A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of US Financial i.e., US Financial and A W go up and down completely randomly.
Pair Corralation between US Financial and A W
Assuming the 90 days trading horizon US Financial 15 is expected to generate 1.04 times more return on investment than A W. However, US Financial is 1.04 times more volatile than A W FOOD. It trades about 0.12 of its potential returns per unit of risk. A W FOOD is currently generating about -0.13 per unit of risk. If you would invest 638.00 in US Financial 15 on November 3, 2024 and sell it today you would earn a total of 160.00 from holding US Financial 15 or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.87% |
| Values | Daily Returns |
US Financial 15 vs. A W FOOD
Performance |
| Timeline |
| US Financial 15 |
| A W FOOD |
US Financial and A W Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and A W
The main advantage of trading using opposite US Financial and A W positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, A W 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 A W will offset losses from the drop in A W's long position.| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
| A W vs. CNJ Capital Investments | A W vs. Monument Mining Limited | A W vs. Canlan Ice Sports | A W vs. 2028 Investment Grade |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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