Correlation Between Festi Hf and Lgerin Egill

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

By analyzing existing cross correlation between Festi hf and lgerin Egill Skallagrmsson, you can compare the effects of market volatilities on Festi Hf and Lgerin Egill 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 Festi Hf with a short position of Lgerin Egill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Festi Hf and Lgerin Egill.

Diversification Opportunities for Festi Hf and Lgerin Egill

0.62

Correlation Coefficient

Festi Hf  Lgerin Egill

Poor diversification

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

Pair Corralation between Festi Hf and Lgerin Egill

Assuming the 90 days trading horizon Festi hf is expected to generate 1.09 times more return on investment than Lgerin Egill. However, Festi Hf is 1.09 times more volatile than lgerin Egill Skallagrmsson. It trades about 0.32 of its potential returns per unit of risk. lgerin Egill Skallagrmsson is currently generating about 0.08 per unit of risk. If you would invest  20,000  in Festi hf on September 13, 2024 and sell it today you would earn a total of  8,200  from holding Festi hf or generate 41.0% return on investment over 90 days.

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

Festi hf  vs.  lgerin Egill Skallagrmsson

Festi hf

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Festi hf are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Festi Hf demonstrated solid returns over the last few months and may actually be approaching a breakup point.

lgerin Egill Skallag

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in lgerin Egill Skallagrmsson are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Lgerin Egill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Festi Hf and Lgerin Egill

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

The idea behind Festi hf and lgerin Egill Skallagrmsson 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.