Correlation Between Fortive and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Fortive and FARO Technologies 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 Fortive and FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortive and FARO Technologies, you can compare the effects of market volatilities on Fortive and FARO Technologies 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 Fortive with a short position of FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortive and FARO Technologies.
Diversification Opportunities for Fortive and FARO Technologies
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortive and FARO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fortive and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies and Fortive 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 Fortive are associated (or correlated) with FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Fortive i.e., Fortive and FARO Technologies go up and down completely randomly.
Pair Corralation between Fortive and FARO Technologies
Assuming the 90 days horizon Fortive is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Fortive is 3.6 times less risky than FARO Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,440 in FARO Technologies on December 28, 2024 and sell it today you would earn a total of 180.00 from holding FARO Technologies or generate 7.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fortive vs. FARO Technologies
Performance |
Timeline |
Fortive |
FARO Technologies |
Fortive and FARO Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fortive and FARO Technologies
The main advantage of trading using opposite Fortive and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortive position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.Fortive vs. Infrastrutture Wireless Italiane | Fortive vs. MAVEN WIRELESS SWEDEN | Fortive vs. GRUPO CARSO A1 | Fortive vs. Motorcar Parts of |
FARO Technologies vs. Fukuyama Transporting Co | FARO Technologies vs. CALTAGIRONE EDITORE | FARO Technologies vs. Transport International Holdings | FARO Technologies vs. United States Steel |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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