Correlation Between Software Circle and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Software Circle 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 Software Circle and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Circle plc and Flow Traders NV, you can compare the effects of market volatilities on Software Circle 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 Software Circle with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Circle and Flow Traders.
Diversification Opportunities for Software Circle and Flow Traders
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Software and Flow is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle plc 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 Software Circle 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 Software Circle plc 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 Software Circle i.e., Software Circle and Flow Traders go up and down completely randomly.
Pair Corralation between Software Circle and Flow Traders
Assuming the 90 days trading horizon Software Circle is expected to generate 1.46 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Software Circle plc is 3.62 times less risky than Flow Traders. It trades about 0.33 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,244 in Flow Traders NV on October 14, 2024 and sell it today you would earn a total of 82.00 from holding Flow Traders NV or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Software Circle plc vs. Flow Traders NV
Performance |
| Timeline |
| Software Circle plc |
| Flow Traders NV |
Software Circle and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Circle and Flow Traders
The main advantage of trading using opposite Software Circle and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Circle 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.| Software Circle vs. Zoom Video Communications | Software Circle vs. Europa Metals | Software Circle vs. Jacquet Metal Service | Software Circle vs. European Metals Holdings |
| Flow Traders vs. Software Circle plc | Flow Traders vs. HCA Healthcare | Flow Traders vs. Omega Healthcare Investors | Flow Traders vs. National Beverage Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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