Correlation Between Fbec Worldwide and Metro

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

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

Diversification Opportunities for Fbec Worldwide and Metro

0.27

Correlation Coefficient

Fbec Worldwide  Metro

Modest diversification

The 3 months correlation between Fbec and Metro is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fbec Worldwide and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc and Fbec Worldwide 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 Fbec Worldwide are associated (or correlated) with Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Fbec Worldwide i.e., Fbec Worldwide and Metro go up and down completely randomly.

Pair Corralation between Fbec Worldwide and Metro

Given the investment horizon of 90 days Fbec Worldwide is expected to generate 116.44 times more return on investment than Metro. However, Fbec Worldwide is 116.44 times more volatile than Metro Inc. It trades about 0.16 of its potential returns per unit of risk. Metro Inc is currently generating about 0.1 per unit of risk. If you would invest  0.03  in Fbec Worldwide on October 7, 2024 and sell it today you would lose (0.01) from holding Fbec Worldwide or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.57%
Values	Daily Returns

Fbec Worldwide  vs.  Metro Inc

Fbec Worldwide

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fbec Worldwide are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Fbec Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Metro Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Metro is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fbec Worldwide and Metro

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

The idea behind Fbec Worldwide and Metro Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.