Correlation Between Ferrexpo PLC and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC and Johnson Matthey 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 Ferrexpo PLC and Johnson Matthey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Johnson Matthey PLC, you can compare the effects of market volatilities on Ferrexpo PLC and Johnson Matthey 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 Ferrexpo PLC with a short position of Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Johnson Matthey.
Diversification Opportunities for Ferrexpo PLC and Johnson Matthey
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ferrexpo and Johnson is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Johnson Matthey go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Johnson Matthey
Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 3.12 times more return on investment than Johnson Matthey. However, Ferrexpo PLC is 3.12 times more volatile than Johnson Matthey PLC. It trades about 0.16 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.13 per unit of risk. If you would invest 6,450 in Ferrexpo PLC on September 1, 2024 and sell it today you would earn a total of 1,680 from holding Ferrexpo PLC or generate 26.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrexpo PLC vs. Johnson Matthey PLC
Performance |
| Timeline |
| Ferrexpo PLC |
| Johnson Matthey PLC |
Ferrexpo PLC and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Johnson Matthey
The main advantage of trading using opposite Ferrexpo PLC and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.| Ferrexpo PLC vs. Monster Beverage Corp | Ferrexpo PLC vs. Teradata Corp | Ferrexpo PLC vs. Fidelity National Information | Ferrexpo PLC vs. MoneysupermarketCom Group PLC |
| Johnson Matthey vs. Teradata Corp | Johnson Matthey vs. MTI Wireless Edge | Johnson Matthey vs. Spirent Communications plc | Johnson Matthey vs. Charter Communications Cl |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |