Correlation Between Flagship Investments and True North

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

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

Diversification Opportunities for Flagship Investments and True North

-0.36

Correlation Coefficient

Flagship Investments  True North

Very good diversification

The 3 months correlation between Flagship and True is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and True North Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Copper and Flagship Investments 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 Flagship Investments are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Copper has no effect on the direction of Flagship Investments i.e., Flagship Investments and True North go up and down completely randomly.

Pair Corralation between Flagship Investments and True North

Assuming the 90 days trading horizon Flagship Investments is expected to generate 0.27 times more return on investment than True North. However, Flagship Investments is 3.77 times less risky than True North. It trades about 0.08 of its potential returns per unit of risk. True North Copper is currently generating about -0.06 per unit of risk. If you would invest  156.00  in Flagship Investments on September 28, 2024 and sell it today you would earn a total of  54.00  from holding Flagship Investments or generate 34.62% return on investment over 90 days.

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

Flagship Investments  vs.  True North Copper

Flagship Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

True North Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days True North Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Flagship Investments and True North

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

The idea behind Flagship Investments and True North Copper 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.