Correlation Between FIREWEED METALS and Canon Marketing

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

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

Diversification Opportunities for FIREWEED METALS and Canon Marketing

0.15

Correlation Coefficient

FIREWEED METALS  Canon Marketing

Average diversification

The 3 months correlation between FIREWEED and Canon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and Canon Marketing Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Marketing Japan and FIREWEED 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 FIREWEED METALS P are associated (or correlated) with Canon Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Marketing Japan has no effect on the direction of FIREWEED METALS i.e., FIREWEED METALS and Canon Marketing go up and down completely randomly.

Pair Corralation between FIREWEED METALS and Canon Marketing

Assuming the 90 days horizon FIREWEED METALS P is expected to generate 2.48 times more return on investment than Canon Marketing. However, FIREWEED METALS is 2.48 times more volatile than Canon Marketing Japan. It trades about 0.05 of its potential returns per unit of risk. Canon Marketing Japan is currently generating about 0.05 per unit of risk. If you would invest  56.00  in FIREWEED METALS P on October 24, 2024 and sell it today you would earn a total of  40.00  from holding FIREWEED METALS P or generate 71.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.76%
Values	Daily Returns

FIREWEED METALS P  vs.  Canon Marketing Japan

FIREWEED METALS P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Canon Marketing Japan

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Marketing Japan are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Canon Marketing reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIREWEED METALS and Canon Marketing

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

The idea behind FIREWEED METALS P and Canon Marketing Japan 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.