Correlation Between Perimeter Solutions and FutureFuel Corp
Can any of the company-specific risk be diversified away by investing in both Perimeter Solutions and FutureFuel Corp 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 Perimeter Solutions and FutureFuel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perimeter Solutions SA and FutureFuel Corp, you can compare the effects of market volatilities on Perimeter Solutions and FutureFuel Corp 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 Perimeter Solutions with a short position of FutureFuel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perimeter Solutions and FutureFuel Corp.
Diversification Opportunities for Perimeter Solutions and FutureFuel Corp
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Perimeter and FutureFuel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Solutions SA and FutureFuel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FutureFuel Corp and Perimeter Solutions 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 Perimeter Solutions SA are associated (or correlated) with FutureFuel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FutureFuel Corp has no effect on the direction of Perimeter Solutions i.e., Perimeter Solutions and FutureFuel Corp go up and down completely randomly.
Pair Corralation between Perimeter Solutions and FutureFuel Corp
Considering the 90-day investment horizon Perimeter Solutions SA is expected to generate 0.89 times more return on investment than FutureFuel Corp. However, Perimeter Solutions SA is 1.12 times less risky than FutureFuel Corp. It trades about -0.02 of its potential returns per unit of risk. FutureFuel Corp is currently generating about -0.18 per unit of risk. If you would invest 1,347 in Perimeter Solutions SA on August 28, 2024 and sell it today you would lose (36.00) from holding Perimeter Solutions SA or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perimeter Solutions SA vs. FutureFuel Corp
Performance |
| Timeline |
| Perimeter Solutions |
| FutureFuel Corp |
Perimeter Solutions and FutureFuel Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perimeter Solutions and FutureFuel Corp
The main advantage of trading using opposite Perimeter Solutions and FutureFuel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perimeter Solutions position performs unexpectedly, FutureFuel Corp 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 FutureFuel Corp will offset losses from the drop in FutureFuel Corp's long position.| Perimeter Solutions vs. Orion Engineered Carbons | Perimeter Solutions vs. Cabot | Perimeter Solutions vs. Minerals Technologies | Perimeter Solutions vs. Quaker Chemical |
| FutureFuel Corp vs. Oil Dri | FutureFuel Corp vs. H B Fuller | FutureFuel Corp vs. Northern Technologies | FutureFuel Corp vs. Cabot |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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