Correlation Between Flow Capital and North American
Can any of the company-specific risk be diversified away by investing in both Flow Capital and North American 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 Flow Capital and North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Capital Corp and North American Financial, you can compare the effects of market volatilities on Flow Capital and North American 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 Flow Capital with a short position of North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Capital and North American.
Diversification Opportunities for Flow Capital and North American
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flow and North is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Flow Capital Corp and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and Flow Capital 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 Flow Capital Corp are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Flow Capital i.e., Flow Capital and North American go up and down completely randomly.
Pair Corralation between Flow Capital and North American
Assuming the 90 days horizon Flow Capital Corp is expected to under-perform the North American. But the pink sheet apears to be less risky and, when comparing its historical volatility, Flow Capital Corp is 1.25 times less risky than North American. The pink sheet trades about -0.13 of its potential returns per unit of risk. The North American Financial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 506.00 in North American Financial on December 1, 2024 and sell it today you would lose (13.00) from holding North American Financial or give up 2.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 71.67% |
Values | Daily Returns |
Flow Capital Corp vs. North American Financial
Performance |
Timeline |
Flow Capital Corp |
North American Financial |
Flow Capital and North American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flow Capital and North American
The main advantage of trading using opposite Flow Capital and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Capital position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.Flow Capital vs. Guardian Capital Group | Flow Capital vs. Urbana | Flow Capital vs. Princeton Capital | Flow Capital vs. Blackhawk Growth Corp |
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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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