Correlation Between FORWARD AIR and Boiron SA

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

By analyzing existing cross correlation between FORWARD AIR P and Boiron SA, you can compare the effects of market volatilities on FORWARD AIR and Boiron SA 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 FORWARD AIR with a short position of Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Boiron SA.

Diversification Opportunities for FORWARD AIR and Boiron SA

0.47

Correlation Coefficient

FORWARD AIR  Boiron SA

Very weak diversification

The 3 months correlation between FORWARD and Boiron is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Boiron SA go up and down completely randomly.

Pair Corralation between FORWARD AIR and Boiron SA

Assuming the 90 days horizon FORWARD AIR P is expected to under-perform the Boiron SA. In addition to that, FORWARD AIR is 2.17 times more volatile than Boiron SA. It trades about -0.03 of its total potential returns per unit of risk. Boiron SA is currently generating about -0.01 per unit of volatility. If you would invest  3,132  in Boiron SA on October 22, 2024 and sell it today you would lose (637.00) from holding Boiron SA or give up 20.34% of portfolio value over 90 days.

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

FORWARD AIR P  vs.  Boiron SA

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Boiron SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FORWARD AIR and Boiron SA

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

The idea behind FORWARD AIR P and Boiron SA 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.