Correlation Between FIREWEED METALS and Stag Industrial

Can any of the company-specific risk be diversified away by investing in both FIREWEED METALS and Stag Industrial 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 Stag Industrial 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 Stag Industrial, you can compare the effects of market volatilities on FIREWEED METALS and Stag Industrial 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 Stag Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIREWEED METALS and Stag Industrial.

Diversification Opportunities for FIREWEED METALS and Stag Industrial

-0.44

Correlation Coefficient

FIREWEED METALS  Stag Industrial

Very good diversification

The 3 months correlation between FIREWEED and Stag is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FIREWEED METALS P and Stag Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stag Industrial 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 Stag Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stag Industrial has no effect on the direction of FIREWEED METALS i.e., FIREWEED METALS and Stag Industrial go up and down completely randomly.

Pair Corralation between FIREWEED METALS and Stag Industrial

Assuming the 90 days horizon FIREWEED METALS P is expected to generate 2.66 times more return on investment than Stag Industrial. However, FIREWEED METALS is 2.66 times more volatile than Stag Industrial. It trades about 0.04 of its potential returns per unit of risk. Stag Industrial is currently generating about 0.02 per unit of risk. If you would invest  64.00  in FIREWEED METALS P on October 25, 2024 and sell it today you would earn a total of  32.00  from holding FIREWEED METALS P or generate 50.0% return on investment over 90 days.

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

FIREWEED METALS P  vs.  Stag Industrial

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.

Stag Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stag Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Stag Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FIREWEED METALS and Stag Industrial

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

The idea behind FIREWEED METALS P and Stag Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.