Correlation Between Mindflair Plc and Fortune Brands

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

By analyzing existing cross correlation between Mindflair Plc and Fortune Brands Home, you can compare the effects of market volatilities on Mindflair Plc and Fortune Brands 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 Mindflair Plc with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mindflair Plc and Fortune Brands.

Diversification Opportunities for Mindflair Plc and Fortune Brands

-0.44

Correlation Coefficient

Mindflair Plc  Fortune Brands

Very good diversification

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

Pair Corralation between Mindflair Plc and Fortune Brands

Assuming the 90 days trading horizon Mindflair Plc is expected to generate 1.96 times more return on investment than Fortune Brands. However, Mindflair Plc is 1.96 times more volatile than Fortune Brands Home. It trades about -0.05 of its potential returns per unit of risk. Fortune Brands Home is currently generating about -0.12 per unit of risk. If you would invest  83.00  in Mindflair Plc on September 18, 2024 and sell it today you would lose (10.00) from holding Mindflair Plc or give up 12.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.5%
Values	Daily Returns

Mindflair Plc  vs.  Fortune Brands Home

Mindflair Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mindflair Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fortune Brands Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mindflair Plc and Fortune Brands

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

The idea behind Mindflair Plc and Fortune Brands Home 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.