Correlation Between Standard and Fly E

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

By analyzing existing cross correlation between Standard Motor Products and Fly E Group, Common, you can compare the effects of market volatilities on Standard and Fly E 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 Standard with a short position of Fly E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard and Fly E.

Diversification Opportunities for Standard and Fly E

0.3

Correlation Coefficient

Standard  Fly E

Weak diversification

The 3 months correlation between Standard and Fly is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Standard Motor Products and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, and Standard 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 Standard Motor Products are associated (or correlated) with Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Standard i.e., Standard and Fly E go up and down completely randomly.

Pair Corralation between Standard and Fly E

Considering the 90-day investment horizon Standard Motor Products is expected to generate 0.22 times more return on investment than Fly E. However, Standard Motor Products is 4.53 times less risky than Fly E. It trades about -0.18 of its potential returns per unit of risk. Fly E Group, Common is currently generating about -0.06 per unit of risk. If you would invest  3,052  in Standard Motor Products on December 28, 2024 and sell it today you would lose (473.00) from holding Standard Motor Products or give up 15.5% of portfolio value over 90 days.

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

Standard Motor Products  vs.  Fly E Group, Common

Standard Motor Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Motor Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fly E Group,

Risk-Adjusted Performance

Insignificant

Over the last 90 days Fly E Group, Common 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Standard and Fly E

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

The idea behind Standard Motor Products and Fly E Group, Common 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.