Correlation Between Select Sector and FibroGen
Can any of the company-specific risk be diversified away by investing in both Select Sector and FibroGen 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 Select Sector and FibroGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and FibroGen, you can compare the effects of market volatilities on Select Sector and FibroGen 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 Select Sector with a short position of FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and FibroGen.
Diversification Opportunities for Select Sector and FibroGen
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Select and FibroGen is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen and Select Sector 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 The Select Sector are associated (or correlated) with FibroGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibroGen has no effect on the direction of Select Sector i.e., Select Sector and FibroGen go up and down completely randomly.
Pair Corralation between Select Sector and FibroGen
Assuming the 90 days trading horizon The Select Sector is expected to generate 0.22 times more return on investment than FibroGen. However, The Select Sector is 4.64 times less risky than FibroGen. It trades about 0.05 of its potential returns per unit of risk. FibroGen is currently generating about -0.02 per unit of risk. If you would invest 111,158 in The Select Sector on November 27, 2024 and sell it today you would earn a total of 52,134 from holding The Select Sector or generate 46.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Select Sector vs. FibroGen
Performance |
| Timeline |
| Select Sector |
| FibroGen |
Select Sector and FibroGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and FibroGen
The main advantage of trading using opposite Select Sector and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector position performs unexpectedly, FibroGen 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 FibroGen will offset losses from the drop in FibroGen's long position.| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
| FibroGen vs. FIBRA Storage | FibroGen vs. New Oriental Education | FibroGen vs. Delta Air Lines | FibroGen vs. First Republic Bank |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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