Correlation Between Fortescue Metals and Robert Half

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

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

Diversification Opportunities for Fortescue Metals and Robert Half

-0.56

Correlation Coefficient

Fortescue Metals  Robert Half

Excellent diversification

The 3 months correlation between Fortescue and Robert is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Robert Half International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robert Half International and Fortescue Metals 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 Fortescue Metals Group are associated (or correlated) with Robert Half. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robert Half International has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Robert Half go up and down completely randomly.

Pair Corralation between Fortescue Metals and Robert Half

Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the Robert Half. In addition to that, Fortescue Metals is 1.4 times more volatile than Robert Half International. It trades about -0.23 of its total potential returns per unit of risk. Robert Half International is currently generating about -0.16 per unit of volatility. If you would invest  7,000  in Robert Half International on October 9, 2024 and sell it today you would lose (250.00) from holding Robert Half International or give up 3.57% of portfolio value over 90 days.

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

Fortescue Metals Group  vs.  Robert Half International

Fortescue Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortescue Metals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fortescue Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Robert Half International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Robert Half International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Robert Half reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortescue Metals and Robert Half

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

The idea behind Fortescue Metals Group and Robert Half International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.