Correlation Between Prestige Consumer and FIREWEED METALS
Can any of the company-specific risk be diversified away by investing in both Prestige Consumer and FIREWEED METALS 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 Prestige Consumer and FIREWEED METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Consumer Healthcare and FIREWEED METALS P, you can compare the effects of market volatilities on Prestige Consumer and FIREWEED METALS 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 Prestige Consumer with a short position of FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Consumer and FIREWEED METALS.
Diversification Opportunities for Prestige Consumer and FIREWEED METALS
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prestige and FIREWEED is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Consumer Healthcare and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P and Prestige Consumer 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 Prestige Consumer Healthcare are associated (or correlated) with FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of Prestige Consumer i.e., Prestige Consumer and FIREWEED METALS go up and down completely randomly.
Pair Corralation between Prestige Consumer and FIREWEED METALS
Assuming the 90 days horizon Prestige Consumer is expected to generate 2.82 times less return on investment than FIREWEED METALS. But when comparing it to its historical volatility, Prestige Consumer Healthcare is 1.74 times less risky than FIREWEED METALS. It trades about 0.06 of its potential returns per unit of risk. FIREWEED METALS P is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 89.00 in FIREWEED METALS P on September 13, 2024 and sell it today you would earn a total of 5.00 from holding FIREWEED METALS P or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Consumer Healthcare vs. FIREWEED METALS P
Performance |
| Timeline |
| Prestige Consumer |
| FIREWEED METALS P |
Prestige Consumer and FIREWEED METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Consumer and FIREWEED METALS
The main advantage of trading using opposite Prestige Consumer and FIREWEED METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Consumer position performs unexpectedly, FIREWEED METALS 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 FIREWEED METALS will offset losses from the drop in FIREWEED METALS's long position.| Prestige Consumer vs. FIREWEED METALS P | Prestige Consumer vs. MELIA HOTELS | Prestige Consumer vs. British American Tobacco | Prestige Consumer vs. PARKEN Sport Entertainment |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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