Correlation Between FLOW TRADERS and Mid America

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

By analyzing existing cross correlation between FLOW TRADERS LTD and Mid America Apartment Communities, you can compare the effects of market volatilities on FLOW TRADERS and Mid America 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 FLOW TRADERS with a short position of Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Mid America.

Diversification Opportunities for FLOW TRADERS and Mid America

0.15

Correlation Coefficient

FLOW TRADERS  Mid America

Average diversification

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

Pair Corralation between FLOW TRADERS and Mid America

Assuming the 90 days horizon FLOW TRADERS is expected to generate 2.68 times less return on investment than Mid America. In addition to that, FLOW TRADERS is 1.02 times more volatile than Mid America Apartment Communities. It trades about 0.13 of its total potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.36 per unit of volatility. If you would invest  13,910  in Mid America Apartment Communities on September 5, 2024 and sell it today you would earn a total of  1,415  from holding Mid America Apartment Communities or generate 10.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

FLOW TRADERS LTD  vs.  Mid America Apartment Communit

FLOW TRADERS LTD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FLOW TRADERS reported solid returns over the last few months and may actually be approaching a breakup point.

Mid America Apartment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mid America Apartment Communities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mid America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FLOW TRADERS and Mid America

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

The idea behind FLOW TRADERS LTD and Mid America Apartment Communities 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 Stocks Directory module to find actively traded stocks across global markets.