Correlation Between Goff Corp and Fanuc

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

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

Diversification Opportunities for Goff Corp and Fanuc

0.3

Correlation Coefficient

Goff Corp  Fanuc

Weak diversification

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

Pair Corralation between Goff Corp and Fanuc

Given the investment horizon of 90 days Goff Corp is expected to generate 2.77 times more return on investment than Fanuc. However, Goff Corp is 2.77 times more volatile than Fanuc. It trades about 0.06 of its potential returns per unit of risk. Fanuc is currently generating about 0.09 per unit of risk. If you would invest  1.03  in Goff Corp on September 5, 2024 and sell it today you would lose (0.04) from holding Goff Corp or give up 3.88% of portfolio value over 90 days.

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

Goff Corp  vs.  Fanuc

Goff Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goff Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile technical and fundamental indicators, Goff Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fanuc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fanuc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fanuc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Goff Corp and Fanuc

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

The idea behind Goff Corp and Fanuc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.