Correlation Between Boswell J and FMC

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

By analyzing existing cross correlation between Boswell J G and FMC Corporation, you can compare the effects of market volatilities on Boswell J and FMC 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 Boswell J with a short position of FMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boswell J and FMC.

Diversification Opportunities for Boswell J and FMC

-0.65

Correlation Coefficient

Boswell J  FMC

Excellent diversification

The 3 months correlation between Boswell and FMC is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Boswell J G and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Boswell J 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 Boswell J G are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Boswell J i.e., Boswell J and FMC go up and down completely randomly.

Pair Corralation between Boswell J and FMC

Given the investment horizon of 90 days Boswell J G is expected to generate 0.71 times more return on investment than FMC. However, Boswell J G is 1.41 times less risky than FMC. It trades about -0.03 of its potential returns per unit of risk. FMC Corporation is currently generating about -0.05 per unit of risk. If you would invest  78,067  in Boswell J G on September 3, 2024 and sell it today you would lose (21,067) from holding Boswell J G or give up 26.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Boswell J G  vs.  FMC Corp.

Boswell J G

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boswell J G are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Boswell J is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, FMC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Boswell J and FMC

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

The idea behind Boswell J G and FMC Corporation 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.