Correlation Between Seed Innovations and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Seed Innovations and Flow Traders 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 Seed Innovations and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seed Innovations and Flow Traders NV, you can compare the effects of market volatilities on Seed Innovations and Flow Traders 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 Seed Innovations with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seed Innovations and Flow Traders.
Diversification Opportunities for Seed Innovations and Flow Traders
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Seed and Flow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Seed Innovations and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV and Seed Innovations 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 Seed Innovations are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Seed Innovations i.e., Seed Innovations and Flow Traders go up and down completely randomly.
Pair Corralation between Seed Innovations and Flow Traders
Assuming the 90 days trading horizon Seed Innovations is expected to generate 3.03 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Seed Innovations is 1.51 times less risky than Flow Traders. It trades about 0.12 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,196 in Flow Traders NV on November 2, 2024 and sell it today you would earn a total of 210.00 from holding Flow Traders NV or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seed Innovations vs. Flow Traders NV
Performance |
| Timeline |
| Seed Innovations |
| Flow Traders NV |
Seed Innovations and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seed Innovations and Flow Traders
The main advantage of trading using opposite Seed Innovations and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seed Innovations position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Seed Innovations vs. Cornish Metals | Seed Innovations vs. American Homes 4 | Seed Innovations vs. bet at home AG | Seed Innovations vs. Cairn Homes PLC |
| Flow Traders vs. Norwegian Air Shuttle | Flow Traders vs. Polar Capital Technology | Flow Traders vs. Raytheon Technologies Corp | Flow Traders vs. Virgin Wines UK |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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