Correlation Between Select Sector and Fluor
Can any of the company-specific risk be diversified away by investing in both Select Sector and Fluor 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 Fluor 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 Fluor, you can compare the effects of market volatilities on Select Sector and Fluor 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 Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and Fluor.
Diversification Opportunities for Select Sector and Fluor
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and Fluor is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor 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 Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Select Sector i.e., Select Sector and Fluor go up and down completely randomly.
Pair Corralation between Select Sector and Fluor
Assuming the 90 days trading horizon The Select Sector is expected to generate 0.7 times more return on investment than Fluor. However, The Select Sector is 1.44 times less risky than Fluor. It trades about 0.1 of its potential returns per unit of risk. Fluor is currently generating about 0.07 per unit of risk. If you would invest 104,964 in The Select Sector on August 25, 2024 and sell it today you would earn a total of 62,512 from holding The Select Sector or generate 59.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.56% |
| Values | Daily Returns |
The Select Sector vs. Fluor
Performance |
| Timeline |
| Select Sector |
| Fluor |
Select Sector and Fluor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and Fluor
The main advantage of trading using opposite Select Sector and Fluor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector position performs unexpectedly, Fluor 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 Fluor will offset losses from the drop in Fluor's long position.| Select Sector vs. Vanguard Index Funds | Select Sector vs. Vanguard Index Funds | Select Sector vs. SPDR SP 500 | Select Sector vs. iShares Trust |
| Fluor vs. Promotora y Operadora | Fluor vs. OPERADORA DE SITES | Fluor vs. The Select Sector | Fluor vs. iShares Global Timber |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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