Correlation Between Fernhill Corp and Humbl

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

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

Diversification Opportunities for Fernhill Corp and Humbl

0.62

Correlation Coefficient

Fernhill Corp  Humbl

Poor diversification

The 3 months correlation between Fernhill and Humbl is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fernhill Corp and Humbl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humbl Inc and Fernhill Corp 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 Fernhill Corp are associated (or correlated) with Humbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humbl Inc has no effect on the direction of Fernhill Corp i.e., Fernhill Corp and Humbl go up and down completely randomly.

Pair Corralation between Fernhill Corp and Humbl

Given the investment horizon of 90 days Fernhill Corp is expected to generate 1.48 times more return on investment than Humbl. However, Fernhill Corp is 1.48 times more volatile than Humbl Inc. It trades about -0.02 of its potential returns per unit of risk. Humbl Inc is currently generating about -0.09 per unit of risk. If you would invest  0.07  in Fernhill Corp on December 21, 2024 and sell it today you would lose (0.04) from holding Fernhill Corp or give up 57.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Fernhill Corp  vs.  Humbl Inc

Fernhill Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fernhill Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Humbl Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humbl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Fernhill Corp and Humbl

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

The idea behind Fernhill Corp and Humbl 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.

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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.