Correlation Between Stagwell and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Stagwell and Freedom Bank 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 Stagwell and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Freedom Bank of, you can compare the effects of market volatilities on Stagwell and Freedom Bank 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 Stagwell with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Freedom Bank.
Diversification Opportunities for Stagwell and Freedom Bank
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stagwell and Freedom is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Stagwell 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 Stagwell are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Stagwell i.e., Stagwell and Freedom Bank go up and down completely randomly.
Pair Corralation between Stagwell and Freedom Bank
Given the investment horizon of 90 days Stagwell is expected to generate 2.1 times more return on investment than Freedom Bank. However, Stagwell is 2.1 times more volatile than Freedom Bank of. It trades about 0.07 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.07 per unit of risk. If you would invest 719.00 in Stagwell on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Stagwell or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Freedom Bank of
Performance |
| Timeline |
| Stagwell |
| Freedom Bank |
Stagwell and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Freedom Bank
The main advantage of trading using opposite Stagwell and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
| Freedom Bank vs. HUMANA INC | Freedom Bank vs. SCOR PK | Freedom Bank vs. Aquagold International | Freedom Bank vs. Thrivent High Yield |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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