Correlation Between Fortune Brands and Athelney Trust

Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Athelney Trust 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 Fortune Brands and Athelney Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortune Brands Home and Athelney Trust plc, you can compare the effects of market volatilities on Fortune Brands and Athelney Trust 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 Fortune Brands with a short position of Athelney Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Athelney Trust.

Diversification Opportunities for Fortune Brands and Athelney Trust

-0.51

Correlation Coefficient

Fortune Brands  Athelney Trust

Excellent diversification

The 3 months correlation between Fortune and Athelney is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Athelney Trust plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athelney Trust plc and Fortune Brands 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 Fortune Brands Home are associated (or correlated) with Athelney Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athelney Trust plc has no effect on the direction of Fortune Brands i.e., Fortune Brands and Athelney Trust go up and down completely randomly.

Pair Corralation between Fortune Brands and Athelney Trust

Assuming the 90 days trading horizon Fortune Brands Home is expected to generate 2.27 times more return on investment than Athelney Trust. However, Fortune Brands is 2.27 times more volatile than Athelney Trust plc. It trades about 0.02 of its potential returns per unit of risk. Athelney Trust plc is currently generating about 0.0 per unit of risk. If you would invest  6,079  in Fortune Brands Home on October 7, 2024 and sell it today you would earn a total of  722.00  from holding Fortune Brands Home or generate 11.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.35%
Values	Daily Returns

Fortune Brands Home  vs.  Athelney Trust plc

Fortune Brands Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Athelney Trust plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Athelney Trust plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Athelney Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fortune Brands and Athelney Trust

The main advantage of trading using opposite Fortune Brands and Athelney Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Athelney Trust 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 Athelney Trust will offset losses from the drop in Athelney Trust's long position.

The idea behind Fortune Brands Home and Athelney Trust plc 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.