Correlation Between Hyundai and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Hyundai and Fortune Brands 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 Hyundai and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Motor and Fortune Brands Home, you can compare the effects of market volatilities on Hyundai and Fortune Brands 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 Hyundai with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai and Fortune Brands.
Diversification Opportunities for Hyundai and Fortune Brands
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hyundai and Fortune is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Motor and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and Hyundai 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 Hyundai Motor are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Hyundai i.e., Hyundai and Fortune Brands go up and down completely randomly.
Pair Corralation between Hyundai and Fortune Brands
Assuming the 90 days trading horizon Hyundai Motor is expected to under-perform the Fortune Brands. In addition to that, Hyundai is 1.32 times more volatile than Fortune Brands Home. It trades about -0.09 of its total potential returns per unit of risk. Fortune Brands Home is currently generating about 0.03 per unit of volatility. If you would invest 7,672 in Fortune Brands Home on September 4, 2024 and sell it today you would earn a total of 173.00 from holding Fortune Brands Home or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 84.62% |
| Values | Daily Returns |
Hyundai Motor vs. Fortune Brands Home
Performance |
| Timeline |
| Hyundai Motor |
| Fortune Brands Home |
Hyundai and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai and Fortune Brands
The main advantage of trading using opposite Hyundai and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Hyundai vs. Empire Metals Limited | Hyundai vs. The Mercantile Investment | Hyundai vs. Sovereign Metals | Hyundai vs. Cornish Metals |
| Fortune Brands vs. Samsung Electronics Co | Fortune Brands vs. Samsung Electronics Co | Fortune Brands vs. Hyundai Motor | Fortune Brands vs. Toyota Motor Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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