Correlation Between New Found and Friedman Industries
Can any of the company-specific risk be diversified away by investing in both New Found and Friedman Industries 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 New Found and Friedman Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Found Gold and Friedman Industries, you can compare the effects of market volatilities on New Found and Friedman Industries 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 New Found with a short position of Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Found and Friedman Industries.
Diversification Opportunities for New Found and Friedman Industries
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and Friedman is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding New Found Gold and Friedman Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friedman Industries and New Found 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 New Found Gold are associated (or correlated) with Friedman Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friedman Industries has no effect on the direction of New Found i.e., New Found and Friedman Industries go up and down completely randomly.
Pair Corralation between New Found and Friedman Industries
Given the investment horizon of 90 days New Found Gold is expected to under-perform the Friedman Industries. In addition to that, New Found is 1.04 times more volatile than Friedman Industries. It trades about -0.23 of its total potential returns per unit of risk. Friedman Industries is currently generating about 0.15 per unit of volatility. If you would invest 1,406 in Friedman Industries on September 5, 2024 and sell it today you would earn a total of 183.00 from holding Friedman Industries or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Found Gold vs. Friedman Industries
Performance |
| Timeline |
| New Found Gold |
| Friedman Industries |
New Found and Friedman Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Found and Friedman Industries
The main advantage of trading using opposite New Found and Friedman Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Found position performs unexpectedly, Friedman Industries 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 Friedman Industries will offset losses from the drop in Friedman Industries' long position.| New Found vs. Friedman Industries | New Found vs. Algoma Steel Group | New Found vs. Reliance Steel Aluminum | New Found vs. Universal Stainless Alloy |
| Friedman Industries vs. Constellium Nv | Friedman Industries vs. Century Aluminum | Friedman Industries vs. China Hongqiao Group | Friedman Industries vs. Kaiser Aluminum |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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