Correlation Between Mohawk Industries and FGI Industries

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

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

Diversification Opportunities for Mohawk Industries and FGI Industries

-0.25

Correlation Coefficient

Mohawk Industries  FGI Industries

Very good diversification

The 3 months correlation between Mohawk and FGI is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and FGI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FGI Industries and Mohawk Industries 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 Mohawk Industries are associated (or correlated) with FGI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FGI Industries has no effect on the direction of Mohawk Industries i.e., Mohawk Industries and FGI Industries go up and down completely randomly.

Pair Corralation between Mohawk Industries and FGI Industries

Considering the 90-day investment horizon Mohawk Industries is expected to under-perform the FGI Industries. But the stock apears to be less risky and, when comparing its historical volatility, Mohawk Industries is 1.93 times less risky than FGI Industries. The stock trades about -0.13 of its potential returns per unit of risk. The FGI Industries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  83.00  in FGI Industries on December 1, 2024 and sell it today you would lose (1.00) from holding FGI Industries or give up 1.2% of portfolio value over 90 days.

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

Mohawk Industries  vs.  FGI Industries

Mohawk Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mohawk Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

FGI Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days FGI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, FGI Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Mohawk Industries and FGI Industries

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

The idea behind Mohawk Industries and FGI Industries 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.