Correlation Between Theratechnologies and Falcon Energy
Can any of the company-specific risk be diversified away by investing in both Theratechnologies and Falcon Energy 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 Theratechnologies and Falcon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Theratechnologies and Falcon Energy Materials, you can compare the effects of market volatilities on Theratechnologies and Falcon Energy 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 Theratechnologies with a short position of Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Theratechnologies and Falcon Energy.
Diversification Opportunities for Theratechnologies and Falcon Energy
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Theratechnologies and Falcon is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Theratechnologies and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials and Theratechnologies 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 Theratechnologies are associated (or correlated) with Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Theratechnologies i.e., Theratechnologies and Falcon Energy go up and down completely randomly.
Pair Corralation between Theratechnologies and Falcon Energy
Assuming the 90 days horizon Theratechnologies is expected to generate 8.73 times less return on investment than Falcon Energy. But when comparing it to its historical volatility, Theratechnologies is 1.09 times less risky than Falcon Energy. It trades about 0.0 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Falcon Energy Materials on September 4, 2024 and sell it today you would earn a total of 11.00 from holding Falcon Energy Materials or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Theratechnologies vs. Falcon Energy Materials
Performance |
| Timeline |
| Theratechnologies |
| Falcon Energy Materials |
Theratechnologies and Falcon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Theratechnologies and Falcon Energy
The main advantage of trading using opposite Theratechnologies and Falcon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Theratechnologies position performs unexpectedly, Falcon Energy 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 Energy will offset losses from the drop in Falcon Energy's long position.| Theratechnologies vs. Royal Bank of | Theratechnologies vs. Toronto Dominion Bank Pref | Theratechnologies vs. Toronto Dominion Bank | Theratechnologies vs. Amazon CDR |
| Falcon Energy vs. Teck Resources Limited | Falcon Energy vs. Ivanhoe Mines | Falcon Energy vs. Filo Mining Corp | Falcon Energy vs. Sigma Lithium Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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