Correlation Between Fortescue Metals and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and PLAYMATES TOYS 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 Fortescue Metals and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and PLAYMATES TOYS, you can compare the effects of market volatilities on Fortescue Metals and PLAYMATES TOYS 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 Fortescue Metals with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and PLAYMATES TOYS.
Diversification Opportunities for Fortescue Metals and PLAYMATES TOYS
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortescue and PLAYMATES is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and Fortescue Metals 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 Fortescue Metals Group are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between Fortescue Metals and PLAYMATES TOYS
Assuming the 90 days horizon Fortescue Metals is expected to generate 13.27 times less return on investment than PLAYMATES TOYS. But when comparing it to its historical volatility, Fortescue Metals Group is 2.84 times less risky than PLAYMATES TOYS. It trades about 0.02 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.36 in PLAYMATES TOYS on October 28, 2024 and sell it today you would earn a total of 5.14 from holding PLAYMATES TOYS or generate 377.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. PLAYMATES TOYS
Performance |
| Timeline |
| Fortescue Metals |
| PLAYMATES TOYS |
Fortescue Metals and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and PLAYMATES TOYS
The main advantage of trading using opposite Fortescue Metals and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.| Fortescue Metals vs. BJs Wholesale Club | Fortescue Metals vs. PICKN PAY STORES | Fortescue Metals vs. Darden Restaurants | Fortescue Metals vs. Casio Computer CoLtd |
| PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc | PLAYMATES TOYS vs. Apple Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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