Correlation Between Fly Play and Marel Hf
Can any of the company-specific risk be diversified away by investing in both Fly Play and Marel Hf 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 Fly Play and Marel Hf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fly Play hf and Marel hf, you can compare the effects of market volatilities on Fly Play and Marel Hf 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 Fly Play with a short position of Marel Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fly Play and Marel Hf.
Diversification Opportunities for Fly Play and Marel Hf
Pay attention - limited upside
The 3 months correlation between Fly and Marel is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fly Play hf and Marel hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marel hf and Fly Play 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 Fly Play hf are associated (or correlated) with Marel Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marel hf has no effect on the direction of Fly Play i.e., Fly Play and Marel Hf go up and down completely randomly.
Pair Corralation between Fly Play and Marel Hf
Assuming the 90 days trading horizon Fly Play hf is expected to generate 4.69 times more return on investment than Marel Hf. However, Fly Play is 4.69 times more volatile than Marel hf. It trades about 0.22 of its potential returns per unit of risk. Marel hf is currently generating about 0.35 per unit of risk. If you would invest 84.00 in Fly Play hf on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Fly Play hf or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fly Play hf vs. Marel hf
Performance |
| Timeline |
| Fly Play hf |
| Marel hf |
Fly Play and Marel Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fly Play and Marel Hf
The main advantage of trading using opposite Fly Play and Marel Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fly Play position performs unexpectedly, Marel Hf 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 Marel Hf will offset losses from the drop in Marel Hf's long position.The idea behind Fly Play hf and Marel hf 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.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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