Correlation Between FTM and Dai

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

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

Diversification Opportunities for FTM and Dai

0.0

Correlation Coefficient

FTM  Dai

Pay attention - limited upside

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

Pair Corralation between FTM and Dai

If you would invest  68.00  in FTM on December 29, 2024 and sell it today you would lose (14.00) from holding FTM or give up 20.59% of portfolio value over 90 days.

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

FTM  vs.  Dai

FTM

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FTM are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, FTM may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dai

Risk-Adjusted Performance

Very Weak

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

Pair Trading with FTM and Dai

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

The idea behind FTM and Dai 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.