Correlation Between Faction Investment and Falcon Energy

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

By analyzing existing cross correlation between Faction Investment Group and Falcon Energy Materials, you can compare the effects of market volatilities on Faction Investment and Falcon Energy 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 Faction Investment with a short position of Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faction Investment and Falcon Energy.

Diversification Opportunities for Faction Investment and Falcon Energy

0.0

Correlation Coefficient

Faction Investment  Falcon Energy

Pay attention - limited upside

The 3 months correlation between Faction and Falcon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Faction Investment Group and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials and Faction Investment 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 Faction Investment Group are associated (or correlated) with Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Faction Investment i.e., Faction Investment and Falcon Energy go up and down completely randomly.

Pair Corralation between Faction Investment and Falcon Energy

Assuming the 90 days trading horizon Faction Investment Group is expected to generate 10.51 times more return on investment than Falcon Energy. However, Faction Investment is 10.51 times more volatile than Falcon Energy Materials. It trades about 0.24 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about -0.32 per unit of risk. If you would invest  1.50  in Faction Investment Group on October 9, 2024 and sell it today you would earn a total of  3.50  from holding Faction Investment Group or generate 233.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Faction Investment Group  vs.  Falcon Energy Materials

Faction Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faction Investment Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Faction Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Falcon Energy Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Energy Materials 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 fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Faction Investment and Falcon Energy

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

The idea behind Faction Investment Group and Falcon Energy 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.