Correlation Between FLT Old and VeriSign

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

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

Diversification Opportunities for FLT Old and VeriSign

0.0

Correlation Coefficient

FLT Old  VeriSign

Pay attention - limited upside

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

Pair Corralation between FLT Old and VeriSign

If you would invest  20,510  in VeriSign on December 30, 2024 and sell it today you would earn a total of  4,582  from holding VeriSign or generate 22.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FLT Old  vs.  VeriSign

FLT Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days FLT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, FLT Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

VeriSign

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, VeriSign displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FLT Old and VeriSign

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

The idea behind FLT Old and VeriSign 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.