Correlation Between Flow Traders and Edgewell Personal

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

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

Diversification Opportunities for Flow Traders and Edgewell Personal

-0.53

Correlation Coefficient

Flow Traders  Edgewell Personal

Excellent diversification

The 3 months correlation between Flow and Edgewell is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care and Flow Traders 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 Flow Traders are associated (or correlated) with Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Flow Traders i.e., Flow Traders and Edgewell Personal go up and down completely randomly.

Pair Corralation between Flow Traders and Edgewell Personal

Assuming the 90 days horizon Flow Traders is expected to generate 1.14 times more return on investment than Edgewell Personal. However, Flow Traders is 1.14 times more volatile than Edgewell Personal Care. It trades about 0.06 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about -0.01 per unit of risk. If you would invest  2,362  in Flow Traders on October 25, 2024 and sell it today you would earn a total of  112.00  from holding Flow Traders or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

Flow Traders  vs.  Edgewell Personal Care

Flow Traders

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Flow Traders may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Edgewell Personal Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Edgewell Personal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Flow Traders and Edgewell Personal

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

The idea behind Flow Traders and Edgewell Personal Care 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.