Correlation Between Fortive Corp and Shimadzu

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

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

Diversification Opportunities for Fortive Corp and Shimadzu

-0.01

Correlation Coefficient

Fortive Corp  Shimadzu

Good diversification

The 3 months correlation between Fortive and Shimadzu is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortive Corp and Shimadzu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimadzu 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 Shimadzu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimadzu has no effect on the direction of Fortive Corp i.e., Fortive Corp and Shimadzu go up and down completely randomly.

Pair Corralation between Fortive Corp and Shimadzu

Considering the 90-day investment horizon Fortive Corp is expected to generate 22.11 times more return on investment than Shimadzu. However, Fortive Corp is 22.11 times more volatile than Shimadzu. It trades about 0.02 of its potential returns per unit of risk. Shimadzu is currently generating about 0.09 per unit of risk. If you would invest  7,345  in Fortive Corp on September 19, 2024 and sell it today you would earn a total of  228.00  from holding Fortive Corp or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Fortive Corp  vs.  Shimadzu

Fortive Corp

Risk-Adjusted Performance

0 of 100

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.

Shimadzu

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimadzu are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shimadzu is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortive Corp and Shimadzu

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

The idea behind Fortive Corp and Shimadzu 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.