Correlation Between Federal Mogul and BIM Birlesik
Can any of the company-specific risk be diversified away by investing in both Federal Mogul and BIM Birlesik 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 Federal Mogul and BIM Birlesik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Mogul Izmit and BIM Birlesik Magazalar, you can compare the effects of market volatilities on Federal Mogul and BIM Birlesik 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 Federal Mogul with a short position of BIM Birlesik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Mogul and BIM Birlesik.
Diversification Opportunities for Federal Mogul and BIM Birlesik
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and BIM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federal Mogul Izmit and BIM Birlesik Magazalar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIM Birlesik Magazalar and Federal Mogul 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 Federal Mogul Izmit are associated (or correlated) with BIM Birlesik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIM Birlesik Magazalar has no effect on the direction of Federal Mogul i.e., Federal Mogul and BIM Birlesik go up and down completely randomly.
Pair Corralation between Federal Mogul and BIM Birlesik
Assuming the 90 days trading horizon Federal Mogul is expected to generate 9.87 times less return on investment than BIM Birlesik. In addition to that, Federal Mogul is 1.54 times more volatile than BIM Birlesik Magazalar. It trades about 0.01 of its total potential returns per unit of risk. BIM Birlesik Magazalar is currently generating about 0.1 per unit of volatility. If you would invest 27,074 in BIM Birlesik Magazalar on September 24, 2024 and sell it today you would earn a total of 22,401 from holding BIM Birlesik Magazalar or generate 82.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Federal Mogul Izmit vs. BIM Birlesik Magazalar
Performance |
Timeline |
Federal Mogul Izmit |
BIM Birlesik Magazalar |
Federal Mogul and BIM Birlesik Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal Mogul and BIM Birlesik
The main advantage of trading using opposite Federal Mogul and BIM Birlesik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Mogul position performs unexpectedly, BIM Birlesik 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 BIM Birlesik will offset losses from the drop in BIM Birlesik's long position.Federal Mogul vs. Tofas Turk Otomobil | Federal Mogul vs. Hektas Ticaret TAS | Federal Mogul vs. Eregli Demir ve |
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Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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