Correlation Between F PD and Energy Focu

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

By analyzing existing cross correlation between F PD and Energy Focu, you can compare the effects of market volatilities on F PD and Energy Focu 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 F PD with a short position of Energy Focu. Check out your portfolio center. Please also check ongoing floating volatility patterns of F PD and Energy Focu.

Diversification Opportunities for F PD and Energy Focu

-0.07

Correlation Coefficient

F PD  Energy Focu

Good diversification

The 3 months correlation between F-PD and Energy is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding F PD and Energy Focu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Focu and F PD 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 F PD are associated (or correlated) with Energy Focu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Focu has no effect on the direction of F PD i.e., F PD and Energy Focu go up and down completely randomly.

Pair Corralation between F PD and Energy Focu

Given the investment horizon of 90 days F PD is expected to generate 0.17 times more return on investment than Energy Focu. However, F PD is 5.77 times less risky than Energy Focu. It trades about -0.21 of its potential returns per unit of risk. Energy Focu is currently generating about -0.4 per unit of risk. If you would invest  2,487  in F PD on October 4, 2024 and sell it today you would lose (45.00) from holding F PD or give up 1.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

F PD  vs.  Energy Focu

F PD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Energy Focu

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Energy Focu is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with F PD and Energy Focu

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

The idea behind F PD and Energy Focu 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.