Correlation Between Tatton Asset and Fortune Brands

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Can any of the company-specific risk be diversified away by investing in both Tatton Asset 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 Tatton Asset and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tatton Asset Management and Fortune Brands Home, you can compare the effects of market volatilities on Tatton Asset 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 Tatton Asset with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatton Asset and Fortune Brands.

Diversification Opportunities for Tatton Asset and Fortune Brands

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Tatton and Fortune is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tatton Asset Management and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and Tatton Asset 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 Tatton Asset Management 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 Home has no effect on the direction of Tatton Asset i.e., Tatton Asset and Fortune Brands go up and down completely randomly.

Pair Corralation between Tatton Asset and Fortune Brands

Assuming the 90 days trading horizon Tatton Asset Management is expected to generate 0.86 times more return on investment than Fortune Brands. However, Tatton Asset Management is 1.16 times less risky than Fortune Brands. It trades about 0.07 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.02 per unit of risk. If you would invest  40,863  in Tatton Asset Management on October 7, 2024 and sell it today you would earn a total of  27,537  from holding Tatton Asset Management or generate 67.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy77.35%
ValuesDaily Returns

Tatton Asset Management  vs.  Fortune Brands Home

 Performance 
       Timeline  
Tatton Asset Management 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Fortune Brands Home 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fortune Brands Home 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tatton Asset and Fortune Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tatton Asset and Fortune Brands

The main advantage of trading using opposite Tatton Asset and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tatton Asset 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 Tatton Asset Management and Fortune Brands Home 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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