Correlation Between Douglas Dynamics and Foresight Autonomous

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

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

Diversification Opportunities for Douglas Dynamics and Foresight Autonomous

-0.45

Correlation Coefficient

Douglas Dynamics  Foresight Autonomous

Very good diversification

The 3 months correlation between Douglas and Foresight is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Dynamics and Foresight Autonomous Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Autonomous and Douglas Dynamics 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 Douglas Dynamics are associated (or correlated) with Foresight Autonomous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Autonomous has no effect on the direction of Douglas Dynamics i.e., Douglas Dynamics and Foresight Autonomous go up and down completely randomly.

Pair Corralation between Douglas Dynamics and Foresight Autonomous

Given the investment horizon of 90 days Douglas Dynamics is expected to generate 0.28 times more return on investment than Foresight Autonomous. However, Douglas Dynamics is 3.55 times less risky than Foresight Autonomous. It trades about 0.01 of its potential returns per unit of risk. Foresight Autonomous Holdings is currently generating about -0.22 per unit of risk. If you would invest  2,312  in Douglas Dynamics on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Douglas Dynamics or generate 0.43% return on investment over 90 days.

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

Douglas Dynamics  vs.  Foresight Autonomous Holdings

Douglas Dynamics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Douglas Dynamics is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Foresight Autonomous

Risk-Adjusted Performance

Very Weak

Over the last 90 days Foresight Autonomous Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Douglas Dynamics and Foresight Autonomous

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

The idea behind Douglas Dynamics and Foresight Autonomous Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.