Correlation Between Petrochemical and Fox Wizel
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Fox Wizel 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 Petrochemical and Fox Wizel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Fox Wizel, you can compare the effects of market volatilities on Petrochemical and Fox Wizel 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 Petrochemical with a short position of Fox Wizel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Fox Wizel.
Diversification Opportunities for Petrochemical and Fox Wizel
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Petrochemical and Fox is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Fox Wizel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Wizel and Petrochemical 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 Petrochemical are associated (or correlated) with Fox Wizel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Wizel has no effect on the direction of Petrochemical i.e., Petrochemical and Fox Wizel go up and down completely randomly.
Pair Corralation between Petrochemical and Fox Wizel
Assuming the 90 days trading horizon Petrochemical is expected to under-perform the Fox Wizel. In addition to that, Petrochemical is 1.38 times more volatile than Fox Wizel. It trades about 0.0 of its total potential returns per unit of risk. Fox Wizel is currently generating about 0.05 per unit of volatility. If you would invest 2,617,449 in Fox Wizel on September 1, 2024 and sell it today you would earn a total of 226,551 from holding Fox Wizel or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Fox Wizel
Performance |
| Timeline |
| Petrochemical |
| Fox Wizel |
Petrochemical and Fox Wizel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Fox Wizel
The main advantage of trading using opposite Petrochemical and Fox Wizel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Fox Wizel 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 Fox Wizel will offset losses from the drop in Fox Wizel's long position.| Petrochemical vs. Brainsway | Petrochemical vs. Mivne Real Estate | Petrochemical vs. Photomyne | Petrochemical vs. Israel Land Development |
| Fox Wizel vs. El Al Israel | Fox Wizel vs. Magic Software Enterprises | Fox Wizel vs. Neto Malinda | Fox Wizel vs. Orbit Technologies |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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