Correlation Between Ferrari NV and Strattec Security
Can any of the company-specific risk be diversified away by investing in both Ferrari NV and Strattec Security 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 Ferrari NV and Strattec Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrari NV and Strattec Security, you can compare the effects of market volatilities on Ferrari NV and Strattec Security 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 Ferrari NV with a short position of Strattec Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrari NV and Strattec Security.
Diversification Opportunities for Ferrari NV and Strattec Security
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ferrari and Strattec is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and Strattec Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strattec Security and Ferrari NV 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 Ferrari NV are associated (or correlated) with Strattec Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strattec Security has no effect on the direction of Ferrari NV i.e., Ferrari NV and Strattec Security go up and down completely randomly.
Pair Corralation between Ferrari NV and Strattec Security
Given the investment horizon of 90 days Ferrari NV is expected to generate 1.25 times less return on investment than Strattec Security. But when comparing it to its historical volatility, Ferrari NV is 1.99 times less risky than Strattec Security. It trades about 0.09 of its potential returns per unit of risk. Strattec Security is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,108 in Strattec Security on September 3, 2024 and sell it today you would earn a total of 2,043 from holding Strattec Security or generate 96.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrari NV vs. Strattec Security
Performance |
| Timeline |
| Ferrari NV |
| Strattec Security |
Ferrari NV and Strattec Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrari NV and Strattec Security
The main advantage of trading using opposite Ferrari NV and Strattec Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV position performs unexpectedly, Strattec Security 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 Strattec Security will offset losses from the drop in Strattec Security's long position.| Ferrari NV vs. Volkswagen AG Pref | Ferrari NV vs. Volkswagen AG 110 | Ferrari NV vs. Porsche Automobil Holding | Ferrari NV vs. Bayerische Motoren Werke |
| Strattec Security vs. Dorman Products | Strattec Security vs. Douglas Dynamics | Strattec Security vs. Monro Muffler Brake | Strattec Security vs. Motorcar Parts of |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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