Correlation Between PHI and Firm Capital
Can any of the company-specific risk be diversified away by investing in both PHI and Firm Capital 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 PHI and Firm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHI Group and Firm Capital Property, you can compare the effects of market volatilities on PHI and Firm Capital 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 PHI with a short position of Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHI and Firm Capital.
Diversification Opportunities for PHI and Firm Capital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PHI and Firm is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PHI Group and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property and PHI 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 PHI Group are associated (or correlated) with Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of PHI i.e., PHI and Firm Capital go up and down completely randomly.
Pair Corralation between PHI and Firm Capital
Given the investment horizon of 90 days PHI is expected to generate 2.04 times less return on investment than Firm Capital. But when comparing it to its historical volatility, PHI Group is 2.55 times less risky than Firm Capital. It trades about 0.08 of its potential returns per unit of risk. Firm Capital Property is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 329.00 in Firm Capital Property on August 25, 2024 and sell it today you would earn a total of 99.00 from holding Firm Capital Property or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
PHI Group vs. Firm Capital Property
Performance |
| Timeline |
| PHI Group |
| Firm Capital Property |
PHI and Firm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHI and Firm Capital
The main advantage of trading using opposite PHI and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHI position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.The idea behind PHI Group and Firm Capital Property pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Firm Capital vs. British Land | Firm Capital vs. Global Net Lease, | Firm Capital vs. VICI Properties | Firm Capital vs. British Land |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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