Correlation Between Preformed Line and Fuji Electric
Can any of the company-specific risk be diversified away by investing in both Preformed Line and Fuji Electric 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 Preformed Line and Fuji Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preformed Line Products and Fuji Electric Co, you can compare the effects of market volatilities on Preformed Line and Fuji Electric 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 Preformed Line with a short position of Fuji Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preformed Line and Fuji Electric.
Diversification Opportunities for Preformed Line and Fuji Electric
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Preformed and Fuji is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and Fuji Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Electric and Preformed Line 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 Preformed Line Products are associated (or correlated) with Fuji Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Electric has no effect on the direction of Preformed Line i.e., Preformed Line and Fuji Electric go up and down completely randomly.
Pair Corralation between Preformed Line and Fuji Electric
Given the investment horizon of 90 days Preformed Line Products is expected to generate 1.34 times more return on investment than Fuji Electric. However, Preformed Line is 1.34 times more volatile than Fuji Electric Co. It trades about 0.06 of its potential returns per unit of risk. Fuji Electric Co is currently generating about 0.05 per unit of risk. If you would invest 7,923 in Preformed Line Products on August 28, 2024 and sell it today you would earn a total of 6,433 from holding Preformed Line Products or generate 81.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preformed Line Products vs. Fuji Electric Co
Performance |
| Timeline |
| Preformed Line Products |
| Fuji Electric |
Preformed Line and Fuji Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preformed Line and Fuji Electric
The main advantage of trading using opposite Preformed Line and Fuji Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preformed Line position performs unexpectedly, Fuji Electric 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 Fuji Electric will offset losses from the drop in Fuji Electric's long position.| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
| Fuji Electric vs. FREYR Battery SA | Fuji Electric vs. nVent Electric PLC | Fuji Electric vs. Hubbell | Fuji Electric vs. Advanced Energy Industries |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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