Correlation Between Fortescue Metals and Yamaha
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Yamaha 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 Yamaha 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 Yamaha, you can compare the effects of market volatilities on Fortescue Metals and Yamaha 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 Yamaha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Yamaha.
Diversification Opportunities for Fortescue Metals and Yamaha
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortescue and Yamaha is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Yamaha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha 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 Yamaha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Yamaha go up and down completely randomly.
Pair Corralation between Fortescue Metals and Yamaha
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 1.05 times more return on investment than Yamaha. However, Fortescue Metals is 1.05 times more volatile than Yamaha. It trades about -0.01 of its potential returns per unit of risk. Yamaha is currently generating about -0.02 per unit of risk. If you would invest 1,152 in Fortescue Metals Group on October 28, 2024 and sell it today you would lose (13.00) from holding Fortescue Metals Group or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Yamaha
Performance |
| Timeline |
| Fortescue Metals |
| Yamaha |
Fortescue Metals and Yamaha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Yamaha
The main advantage of trading using opposite Fortescue Metals and Yamaha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Yamaha 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 Yamaha will offset losses from the drop in Yamaha'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 |
| Yamaha vs. Booking Holdings | Yamaha vs. Oriental Land Co | Yamaha vs. ANTA Sports Products | Yamaha vs. Li Ning Company |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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