Correlation Between Tetragon Financial and Fugro NV
Can any of the company-specific risk be diversified away by investing in both Tetragon Financial and Fugro NV 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 Tetragon Financial and Fugro NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetragon Financial Group and Fugro NV, you can compare the effects of market volatilities on Tetragon Financial and Fugro NV 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 Tetragon Financial with a short position of Fugro NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and Fugro NV.
Diversification Opportunities for Tetragon Financial and Fugro NV
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tetragon and Fugro is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and Fugro NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fugro NV and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with Fugro NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fugro NV has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and Fugro NV go up and down completely randomly.
Pair Corralation between Tetragon Financial and Fugro NV
Assuming the 90 days trading horizon Tetragon Financial Group is expected to generate 0.58 times more return on investment than Fugro NV. However, Tetragon Financial Group is 1.71 times less risky than Fugro NV. It trades about 0.06 of its potential returns per unit of risk. Fugro NV is currently generating about 0.02 per unit of risk. If you would invest 901.00 in Tetragon Financial Group on August 24, 2024 and sell it today you would earn a total of 379.00 from holding Tetragon Financial Group or generate 42.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.49% |
| Values | Daily Returns |
Tetragon Financial Group vs. Fugro NV
Performance |
| Timeline |
| Tetragon Financial |
| Fugro NV |
Tetragon Financial and Fugro NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetragon Financial and Fugro NV
The main advantage of trading using opposite Tetragon Financial and Fugro NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetragon Financial position performs unexpectedly, Fugro NV 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 Fugro NV will offset losses from the drop in Fugro NV's long position.The idea behind Tetragon Financial Group and Fugro NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fugro NV vs. SBM Offshore NV | Fugro NV vs. Koninklijke BAM Groep | Fugro NV vs. PostNL NV | Fugro NV vs. Aegon NV |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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