Correlation Between GT Capital and Figaro Coffee
Can any of the company-specific risk be diversified away by investing in both GT Capital and Figaro Coffee 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 GT Capital and Figaro Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GT Capital Holdings and Figaro Coffee Group, you can compare the effects of market volatilities on GT Capital and Figaro Coffee 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 GT Capital with a short position of Figaro Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Figaro Coffee.
Diversification Opportunities for GT Capital and Figaro Coffee
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GTCAP and Figaro is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Figaro Coffee Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figaro Coffee Group and GT Capital 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 GT Capital Holdings are associated (or correlated) with Figaro Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figaro Coffee Group has no effect on the direction of GT Capital i.e., GT Capital and Figaro Coffee go up and down completely randomly.
Pair Corralation between GT Capital and Figaro Coffee
Assuming the 90 days trading horizon GT Capital is expected to generate 1.37 times less return on investment than Figaro Coffee. But when comparing it to its historical volatility, GT Capital Holdings is 1.06 times less risky than Figaro Coffee. It trades about 0.05 of its potential returns per unit of risk. Figaro Coffee Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 63.00 in Figaro Coffee Group on September 4, 2024 and sell it today you would earn a total of 21.00 from holding Figaro Coffee Group or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GT Capital Holdings vs. Figaro Coffee Group
Performance |
| Timeline |
| GT Capital Holdings |
| Figaro Coffee Group |
GT Capital and Figaro Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GT Capital and Figaro Coffee
The main advantage of trading using opposite GT Capital and Figaro Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital position performs unexpectedly, Figaro Coffee 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 Figaro Coffee will offset losses from the drop in Figaro Coffee's long position.| GT Capital vs. Semirara Mining Corp | GT Capital vs. Globe Telecom | GT Capital vs. Rizal Commercial Banking | GT Capital vs. Sun Life Financial |
| Figaro Coffee vs. Semirara Mining Corp | Figaro Coffee vs. Apex Mining Co | Figaro Coffee vs. Atlas Consolidated Mining | Figaro Coffee vs. Bank of the |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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