Correlation Between FactSet Research and Origin Materials

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

By analyzing existing cross correlation between FactSet Research Systems and Origin Materials, you can compare the effects of market volatilities on FactSet Research and Origin Materials 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 FactSet Research with a short position of Origin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of FactSet Research and Origin Materials.

Diversification Opportunities for FactSet Research and Origin Materials

-0.78

Correlation Coefficient

FactSet Research  Origin Materials

Pay attention - limited upside

The 3 months correlation between FactSet and Origin is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Origin Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Materials and FactSet Research 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 FactSet Research Systems are associated (or correlated) with Origin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Materials has no effect on the direction of FactSet Research i.e., FactSet Research and Origin Materials go up and down completely randomly.

Pair Corralation between FactSet Research and Origin Materials

Considering the 90-day investment horizon FactSet Research Systems is expected to under-perform the Origin Materials. But the stock apears to be less risky and, when comparing its historical volatility, FactSet Research Systems is 4.15 times less risky than Origin Materials. The stock trades about -0.03 of its potential returns per unit of risk. The Origin Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Origin Materials on October 4, 2024 and sell it today you would earn a total of  3.00  from holding Origin Materials or generate 2.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

FactSet Research Systems  vs.  Origin Materials

FactSet Research Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FactSet Research and Origin Materials

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

The idea behind FactSet Research Systems and Origin Materials 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.