Correlation Between Federal Mogul and Trabzonspor Sportif

Can any of the company-specific risk be diversified away by investing in both Federal Mogul and Trabzonspor Sportif 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 Trabzonspor Sportif 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 Trabzonspor Sportif Yatirim, you can compare the effects of market volatilities on Federal Mogul and Trabzonspor Sportif 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 Trabzonspor Sportif. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Mogul and Trabzonspor Sportif.

Diversification Opportunities for Federal Mogul and Trabzonspor Sportif

0.06

Correlation Coefficient

Federal Mogul  Trabzonspor Sportif

Significant diversification

The 3 months correlation between Federal and Trabzonspor is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Federal Mogul Izmit and Trabzonspor Sportif Yatirim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trabzonspor Sportif 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 Trabzonspor Sportif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trabzonspor Sportif has no effect on the direction of Federal Mogul i.e., Federal Mogul and Trabzonspor Sportif go up and down completely randomly.

Pair Corralation between Federal Mogul and Trabzonspor Sportif

Assuming the 90 days trading horizon Federal Mogul is expected to generate 5.07 times less return on investment than Trabzonspor Sportif. But when comparing it to its historical volatility, Federal Mogul Izmit is 1.56 times less risky than Trabzonspor Sportif. It trades about 0.07 of its potential returns per unit of risk. Trabzonspor Sportif Yatirim is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Trabzonspor Sportif Yatirim on October 7, 2024 and sell it today you would earn a total of  28.00  from holding Trabzonspor Sportif Yatirim or generate 30.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Federal Mogul Izmit  vs.  Trabzonspor Sportif Yatirim

Federal Mogul Izmit

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Mogul Izmit are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Federal Mogul demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Trabzonspor Sportif

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trabzonspor Sportif Yatirim are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Trabzonspor Sportif demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal Mogul and Trabzonspor Sportif

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

The idea behind Federal Mogul Izmit and Trabzonspor Sportif Yatirim 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.