Correlation Between DFS Furniture and FORMPIPE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and FORMPIPE SOFTWARE 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 DFS Furniture and FORMPIPE SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on DFS Furniture and FORMPIPE SOFTWARE 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 DFS Furniture with a short position of FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and FORMPIPE SOFTWARE.
Diversification Opportunities for DFS Furniture and FORMPIPE SOFTWARE
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and FORMPIPE is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of DFS Furniture i.e., DFS Furniture and FORMPIPE SOFTWARE go up and down completely randomly.
Pair Corralation between DFS Furniture and FORMPIPE SOFTWARE
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.65 times more return on investment than FORMPIPE SOFTWARE. However, DFS Furniture PLC is 1.55 times less risky than FORMPIPE SOFTWARE. It trades about 0.06 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about -0.05 per unit of risk. If you would invest 163.00 in DFS Furniture PLC on November 18, 2024 and sell it today you would earn a total of 3.00 from holding DFS Furniture PLC or generate 1.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DFS Furniture PLC vs. FORMPIPE SOFTWARE AB
Performance |
Timeline |
DFS Furniture PLC |
FORMPIPE SOFTWARE |
DFS Furniture and FORMPIPE SOFTWARE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DFS Furniture and FORMPIPE SOFTWARE
The main advantage of trading using opposite DFS Furniture and FORMPIPE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE will offset losses from the drop in FORMPIPE SOFTWARE's long position.DFS Furniture vs. Osisko Metals | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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