Correlation Between FLOW TRADERS and SHELL PLC
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and SHELL PLC 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 FLOW TRADERS and SHELL PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and SHELL PLC WI, you can compare the effects of market volatilities on FLOW TRADERS and SHELL PLC 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 FLOW TRADERS with a short position of SHELL PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and SHELL PLC.
Diversification Opportunities for FLOW TRADERS and SHELL PLC
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FLOW and SHELL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and SHELL PLC WI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELL PLC WI and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with SHELL PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELL PLC WI has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and SHELL PLC go up and down completely randomly.
Pair Corralation between FLOW TRADERS and SHELL PLC
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 1.75 times more return on investment than SHELL PLC. However, FLOW TRADERS is 1.75 times more volatile than SHELL PLC WI. It trades about 0.04 of its potential returns per unit of risk. SHELL PLC WI is currently generating about -0.01 per unit of risk. If you would invest 1,963 in FLOW TRADERS LTD on September 2, 2024 and sell it today you would earn a total of 149.00 from holding FLOW TRADERS LTD or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. SHELL PLC WI
Performance |
| Timeline |
| FLOW TRADERS LTD |
| SHELL PLC WI |
FLOW TRADERS and SHELL PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and SHELL PLC
The main advantage of trading using opposite FLOW TRADERS and SHELL PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, SHELL PLC 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 SHELL PLC will offset losses from the drop in SHELL PLC's long position.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. NMI Holdings |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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