Correlation Between Fundamental Invest and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both Fundamental Invest and Strategic Investments 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 Fundamental Invest and Strategic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Invest Stock and Strategic Investments AS, you can compare the effects of market volatilities on Fundamental Invest and Strategic Investments 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 Fundamental Invest with a short position of Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Invest and Strategic Investments.
Diversification Opportunities for Fundamental Invest and Strategic Investments
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fundamental and Strategic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Invest Stock and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments and Fundamental Invest 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 Fundamental Invest Stock are associated (or correlated) with Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Fundamental Invest i.e., Fundamental Invest and Strategic Investments go up and down completely randomly.
Pair Corralation between Fundamental Invest and Strategic Investments
Assuming the 90 days trading horizon Fundamental Invest Stock is expected to generate 0.23 times more return on investment than Strategic Investments. However, Fundamental Invest Stock is 4.43 times less risky than Strategic Investments. It trades about -0.12 of its potential returns per unit of risk. Strategic Investments AS is currently generating about -0.06 per unit of risk. If you would invest 20,164 in Fundamental Invest Stock on September 13, 2024 and sell it today you would lose (924.00) from holding Fundamental Invest Stock or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Invest Stock vs. Strategic Investments AS
Performance |
| Timeline |
| Fundamental Invest Stock |
| Strategic Investments |
Fundamental Invest and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Invest and Strategic Investments
The main advantage of trading using opposite Fundamental Invest and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Invest position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| Fundamental Invest vs. Strategic Investments AS | Fundamental Invest vs. Laan Spar Bank | Fundamental Invest vs. Nordea Bank Abp | Fundamental Invest vs. Prime Office AS |
| Strategic Investments vs. Newcap Holding AS | Strategic Investments vs. SKAKO AS | Strategic Investments vs. Rovsing AS |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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