Correlation Between Perma Pipe and Fortune Brands

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

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

Diversification Opportunities for Perma Pipe and Fortune Brands

-0.64

Correlation Coefficient

Perma Pipe  Fortune Brands

Excellent diversification

The 3 months correlation between Perma and Fortune is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Perma Pipe International Holdi and Fortune Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Innov and Perma Pipe 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 Perma Pipe International Holdings 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 Innov has no effect on the direction of Perma Pipe i.e., Perma Pipe and Fortune Brands go up and down completely randomly.

Pair Corralation between Perma Pipe and Fortune Brands

Given the investment horizon of 90 days Perma Pipe International Holdings is expected to generate 3.74 times more return on investment than Fortune Brands. However, Perma Pipe is 3.74 times more volatile than Fortune Brands Innovations. It trades about 0.06 of its potential returns per unit of risk. Fortune Brands Innovations is currently generating about -0.41 per unit of risk. If you would invest  1,534  in Perma Pipe International Holdings on September 29, 2024 and sell it today you would earn a total of  56.00  from holding Perma Pipe International Holdings or generate 3.65% return on investment over 90 days.

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

Perma Pipe International Holdi  vs.  Fortune Brands Innovations

Perma Pipe Internati

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Perma Pipe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Fortune Brands Innov

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Brands Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Perma Pipe and Fortune Brands

The main advantage of trading using opposite Perma Pipe and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma Pipe 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 Perma Pipe International Holdings and Fortune Brands Innovations 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.