Correlation Between FLOW TRADERS and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and ITALIAN WINE 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 ITALIAN WINE 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 ITALIAN WINE BRANDS, you can compare the effects of market volatilities on FLOW TRADERS and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and ITALIAN WINE.
Diversification Opportunities for FLOW TRADERS and ITALIAN WINE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FLOW and ITALIAN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and ITALIAN WINE go up and down completely randomly.
Pair Corralation between FLOW TRADERS and ITALIAN WINE
Assuming the 90 days horizon FLOW TRADERS is expected to generate 2.56 times less return on investment than ITALIAN WINE. In addition to that, FLOW TRADERS is 1.07 times more volatile than ITALIAN WINE BRANDS. It trades about 0.03 of its total potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.08 per unit of volatility. If you would invest 1,795 in ITALIAN WINE BRANDS on September 3, 2024 and sell it today you would earn a total of 415.00 from holding ITALIAN WINE BRANDS or generate 23.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| FLOW TRADERS LTD |
| ITALIAN WINE BRANDS |
FLOW TRADERS and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and ITALIAN WINE
The main advantage of trading using opposite FLOW TRADERS and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp |
| ITALIAN WINE vs. ANDREW PELLER LTD | ITALIAN WINE vs. CHINA TONTINE WINES | ITALIAN WINE vs. Superior Plus Corp | ITALIAN WINE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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