Correlation Between Falcons Beyond and MDU Resources

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

By analyzing existing cross correlation between Falcons Beyond Global, and MDU Resources Group, you can compare the effects of market volatilities on Falcons Beyond and MDU Resources 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 Falcons Beyond with a short position of MDU Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcons Beyond and MDU Resources.

Diversification Opportunities for Falcons Beyond and MDU Resources

0.4

Correlation Coefficient

Falcons Beyond  MDU Resources

Very weak diversification

The 3 months correlation between Falcons and MDU is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and MDU Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDU Resources Group and Falcons Beyond 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 Falcons Beyond Global, are associated (or correlated) with MDU Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDU Resources Group has no effect on the direction of Falcons Beyond i.e., Falcons Beyond and MDU Resources go up and down completely randomly.

Pair Corralation between Falcons Beyond and MDU Resources

Assuming the 90 days horizon Falcons Beyond Global, is expected to generate 17.08 times more return on investment than MDU Resources. However, Falcons Beyond is 17.08 times more volatile than MDU Resources Group. It trades about 0.09 of its potential returns per unit of risk. MDU Resources Group is currently generating about -0.15 per unit of risk. If you would invest  75.00  in Falcons Beyond Global, on December 2, 2024 and sell it today you would lose (8.00) from holding Falcons Beyond Global, or give up 10.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.13%
Values	Daily Returns

Falcons Beyond Global,  vs.  MDU Resources Group

Falcons Beyond Global,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

MDU Resources Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MDU Resources Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Falcons Beyond and MDU Resources

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

The idea behind Falcons Beyond Global, and MDU Resources Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.