Correlation Between Retail Food and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Retail Food and Falcon Metals 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 Retail Food and Falcon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Falcon Metals, you can compare the effects of market volatilities on Retail Food and Falcon Metals 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 Retail Food with a short position of Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Falcon Metals.
Diversification Opportunities for Retail Food and Falcon Metals
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and Falcon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals and Retail Food 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 Retail Food Group are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Retail Food i.e., Retail Food and Falcon Metals go up and down completely randomly.
Pair Corralation between Retail Food and Falcon Metals
Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the Falcon Metals. But the stock apears to be less risky and, when comparing its historical volatility, Retail Food Group is 2.08 times less risky than Falcon Metals. The stock trades about -0.21 of its potential returns per unit of risk. The Falcon Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Falcon Metals on September 20, 2024 and sell it today you would earn a total of 1.00 from holding Falcon Metals or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Falcon Metals
Performance |
| Timeline |
| Retail Food Group |
| Falcon Metals |
Retail Food and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Falcon Metals
The main advantage of trading using opposite Retail Food and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Retail Food vs. Magellan Financial Group | Retail Food vs. Macquarie Bank Limited | Retail Food vs. Bell Financial Group | Retail Food vs. Thorney Technologies |
| Falcon Metals vs. Catalyst Metals | Falcon Metals vs. Retail Food Group | Falcon Metals vs. Aeon Metals | Falcon Metals vs. Beston Global Food |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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