Correlation Between Floridienne and Whitestone

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

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

Diversification Opportunities for Floridienne and Whitestone

0.72

Correlation Coefficient

Floridienne  Whitestone

Poor diversification

The 3 months correlation between Floridienne and Whitestone is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Floridienne and Whitestone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitestone Group and Floridienne 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 Floridienne are associated (or correlated) with Whitestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitestone Group has no effect on the direction of Floridienne i.e., Floridienne and Whitestone go up and down completely randomly.

Pair Corralation between Floridienne and Whitestone

Assuming the 90 days trading horizon Floridienne is expected to generate 1.88 times more return on investment than Whitestone. However, Floridienne is 1.88 times more volatile than Whitestone Group. It trades about 0.1 of its potential returns per unit of risk. Whitestone Group is currently generating about 0.05 per unit of risk. If you would invest  61,000  in Floridienne on October 23, 2024 and sell it today you would earn a total of  8,000  from holding Floridienne or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Floridienne  vs.  Whitestone Group

Floridienne

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Floridienne are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Floridienne reported solid returns over the last few months and may actually be approaching a breakup point.

Whitestone Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Whitestone is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Floridienne and Whitestone

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

The idea behind Floridienne and Whitestone Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.