Correlation Between Panasonic Corp and Ferguson Plc

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

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

Diversification Opportunities for Panasonic Corp and Ferguson Plc

0.06

Correlation Coefficient

Panasonic Corp  Ferguson Plc

Significant diversification

The 3 months correlation between Panasonic and Ferguson is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Panasonic Corp and Ferguson Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferguson Plc and Panasonic 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 Panasonic Corp are associated (or correlated) with Ferguson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferguson Plc has no effect on the direction of Panasonic Corp i.e., Panasonic Corp and Ferguson Plc go up and down completely randomly.

Pair Corralation between Panasonic Corp and Ferguson Plc

Assuming the 90 days trading horizon Panasonic Corp is expected to generate 1.38 times more return on investment than Ferguson Plc. However, Panasonic Corp is 1.38 times more volatile than Ferguson Plc. It trades about 0.34 of its potential returns per unit of risk. Ferguson Plc is currently generating about -0.05 per unit of risk. If you would invest  124,300  in Panasonic Corp on September 27, 2024 and sell it today you would earn a total of  37,600  from holding Panasonic Corp or generate 30.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.56%
Values	Daily Returns

Panasonic Corp  vs.  Ferguson Plc

Panasonic Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Panasonic Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Panasonic Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ferguson Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferguson Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ferguson Plc is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Panasonic Corp and Ferguson Plc

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

The idea behind Panasonic Corp and Ferguson Plc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.