Correlation Between Futura Medical and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Futura Medical and Cairn Homes 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 Futura Medical and Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futura Medical and Cairn Homes PLC, you can compare the effects of market volatilities on Futura Medical and Cairn Homes 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 Futura Medical with a short position of Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futura Medical and Cairn Homes.
Diversification Opportunities for Futura Medical and Cairn Homes
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Futura and Cairn is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Futura Medical and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Futura Medical 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 Futura Medical are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Futura Medical i.e., Futura Medical and Cairn Homes go up and down completely randomly.
Pair Corralation between Futura Medical and Cairn Homes
Assuming the 90 days trading horizon Futura Medical is expected to under-perform the Cairn Homes. In addition to that, Futura Medical is 1.0 times more volatile than Cairn Homes PLC. It trades about -0.22 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.19 per unit of volatility. If you would invest 18,380 in Cairn Homes PLC on August 31, 2024 and sell it today you would lose (1,300) from holding Cairn Homes PLC or give up 7.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futura Medical vs. Cairn Homes PLC
Performance |
| Timeline |
| Futura Medical |
| Cairn Homes PLC |
Futura Medical and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futura Medical and Cairn Homes
The main advantage of trading using opposite Futura Medical and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futura Medical position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Futura Medical vs. Toyota Motor Corp | Futura Medical vs. SoftBank Group Corp | Futura Medical vs. State Bank of | Futura Medical vs. MOL Hungarian Oil |
| Cairn Homes vs. Alfa Financial Software | Cairn Homes vs. Check Point Software | Cairn Homes vs. GreenX Metals | Cairn Homes vs. Wheaton Precious Metals |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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