Correlation Between Faction Investment and Sienna Resources

Can any of the company-specific risk be diversified away by investing in both Faction Investment and Sienna 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 Faction Investment and Sienna Resources 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 Sienna Resources, you can compare the effects of market volatilities on Faction Investment and Sienna 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 Faction Investment with a short position of Sienna Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faction Investment and Sienna Resources.

Diversification Opportunities for Faction Investment and Sienna Resources

0.0

Correlation Coefficient

Faction Investment  Sienna Resources

Pay attention - limited upside

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

Pair Corralation between Faction Investment and Sienna Resources

If you would invest  1.50  in Faction Investment Group on October 8, 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.  Sienna Resources

Faction Investment

Risk-Adjusted Performance

10 of 100

Very Weak

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.

Sienna Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sienna Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sienna Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faction Investment and Sienna Resources

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

The idea behind Faction Investment Group and Sienna Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.