Correlation Between Global Warming and Fortive Corp

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

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

Diversification Opportunities for Global Warming and Fortive Corp

-0.18

Correlation Coefficient

Global Warming  Fortive Corp

Good diversification

The 3 months correlation between Global and Fortive is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Warming Solut and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp and Global Warming 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 Global Warming Solut are associated (or correlated) with Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Global Warming i.e., Global Warming and Fortive Corp go up and down completely randomly.

Pair Corralation between Global Warming and Fortive Corp

Given the investment horizon of 90 days Global Warming Solut is expected to generate 31.55 times more return on investment than Fortive Corp. However, Global Warming is 31.55 times more volatile than Fortive Corp. It trades about 0.15 of its potential returns per unit of risk. Fortive Corp is currently generating about 0.03 per unit of risk. If you would invest  32.00  in Global Warming Solut on September 18, 2024 and sell it today you would earn a total of  128.00  from holding Global Warming Solut or generate 400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Global Warming Solut  vs.  Fortive Corp

Global Warming Solut

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Warming Solut are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global Warming displayed solid returns over the last few months and may actually be approaching a breakup point.

Fortive Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Global Warming and Fortive Corp

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

The idea behind Global Warming Solut and Fortive Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.