Correlation Between Falcon Energy and Bip Investment

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

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

Diversification Opportunities for Falcon Energy and Bip Investment

0.54

Correlation Coefficient

Falcon Energy  Bip Investment

Very weak diversification

The 3 months correlation between Falcon and Bip is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of Falcon Energy i.e., Falcon Energy and Bip Investment go up and down completely randomly.

Pair Corralation between Falcon Energy and Bip Investment

If you would invest  2,660  in Bip Investment Corp on October 14, 2024 and sell it today you would earn a total of  0.00  from holding Bip Investment Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.63%
Values	Daily Returns

Falcon Energy Materials  vs.  Bip Investment Corp

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Bip Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bip Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Bip Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Falcon Energy and Bip Investment

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

The idea behind Falcon Energy Materials and Bip Investment Corp 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.