Correlation Between Rubicon Water and Future Generation

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

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

Diversification Opportunities for Rubicon Water and Future Generation

-0.55

Correlation Coefficient

Rubicon Water  Future Generation

Excellent diversification

The 3 months correlation between Rubicon and Future is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Water and Future Generation Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Generation Global and Rubicon Water 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 Rubicon Water are associated (or correlated) with Future Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Generation Global has no effect on the direction of Rubicon Water i.e., Rubicon Water and Future Generation go up and down completely randomly.

Pair Corralation between Rubicon Water and Future Generation

Assuming the 90 days trading horizon Rubicon Water is expected to generate 5.42 times more return on investment than Future Generation. However, Rubicon Water is 5.42 times more volatile than Future Generation Global. It trades about 0.02 of its potential returns per unit of risk. Future Generation Global is currently generating about 0.05 per unit of risk. If you would invest  29.00  in Rubicon Water on December 30, 2024 and sell it today you would lose (1.00) from holding Rubicon Water or give up 3.45% of portfolio value over 90 days.

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

Rubicon Water  vs.  Future Generation Global

Rubicon Water

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Rubicon Water is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Future Generation Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Future Generation Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Future Generation is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rubicon Water and Future Generation

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

The idea behind Rubicon Water and Future Generation Global 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.