Correlation Between Furukawa Electric and Laredo Oil
Can any of the company-specific risk be diversified away by investing in both Furukawa Electric and Laredo Oil 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 Furukawa Electric and Laredo Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Furukawa Electric Co and Laredo Oil, you can compare the effects of market volatilities on Furukawa Electric and Laredo Oil 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 Furukawa Electric with a short position of Laredo Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Furukawa Electric and Laredo Oil.
Diversification Opportunities for Furukawa Electric and Laredo Oil
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Furukawa and Laredo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Furukawa Electric Co and Laredo Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laredo Oil and Furukawa Electric 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 Furukawa Electric Co are associated (or correlated) with Laredo Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laredo Oil has no effect on the direction of Furukawa Electric i.e., Furukawa Electric and Laredo Oil go up and down completely randomly.
Pair Corralation between Furukawa Electric and Laredo Oil
Assuming the 90 days horizon Furukawa Electric Co is expected to generate 1.45 times more return on investment than Laredo Oil. However, Furukawa Electric is 1.45 times more volatile than Laredo Oil. It trades about 0.27 of its potential returns per unit of risk. Laredo Oil is currently generating about -0.02 per unit of risk. If you would invest 2,622 in Furukawa Electric Co on August 30, 2024 and sell it today you would earn a total of 1,178 from holding Furukawa Electric Co or generate 44.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Furukawa Electric Co vs. Laredo Oil
Performance |
| Timeline |
| Furukawa Electric |
| Laredo Oil |
Furukawa Electric and Laredo Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Furukawa Electric and Laredo Oil
The main advantage of trading using opposite Furukawa Electric and Laredo Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Furukawa Electric position performs unexpectedly, Laredo Oil 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 Laredo Oil will offset losses from the drop in Laredo Oil's long position.| Furukawa Electric vs. FREYR Battery SA | Furukawa Electric vs. nVent Electric PLC | Furukawa Electric vs. Hubbell | Furukawa Electric vs. Advanced Energy Industries |
| Laredo Oil vs. Yamaha Motor Co | Laredo Oil vs. Nitto Denko Corp | Laredo Oil vs. Farmers Merchants Bancorp | Laredo Oil vs. Furukawa Electric Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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