Correlation Between Fortive Corp and Global Warming

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

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

Diversification Opportunities for Fortive Corp and Global Warming

-0.45

Correlation Coefficient

Fortive Corp  Global Warming

Very good diversification

The 3 months correlation between Fortive and Global is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Global Warming Solut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Warming Solut and Fortive Corp 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 Fortive Corp are associated (or correlated) with Global Warming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Warming Solut has no effect on the direction of Fortive Corp i.e., Fortive Corp and Global Warming go up and down completely randomly.

Pair Corralation between Fortive Corp and Global Warming

Considering the 90-day investment horizon Fortive Corp is expected to under-perform the Global Warming. But the stock apears to be less risky and, when comparing its historical volatility, Fortive Corp is 9.28 times less risky than Global Warming. The stock trades about -0.12 of its potential returns per unit of risk. The Global Warming Solut is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Global Warming Solut on December 5, 2024 and sell it today you would earn a total of  2.00  from holding Global Warming Solut or generate 2.67% return on investment over 90 days.

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

Fortive Corp  vs.  Global Warming Solut

Fortive Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fortive Corp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Global Warming Solut

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Warming Solut has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fortive Corp and Global Warming

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

The idea behind Fortive Corp and Global Warming Solut 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.