Correlation Between F1RA34 and Fiverr International

Can any of the company-specific risk be diversified away by investing in both F1RA34 and Fiverr International 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 F1RA34 and Fiverr International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between F1RA34 and Fiverr International, you can compare the effects of market volatilities on F1RA34 and Fiverr International 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 F1RA34 with a short position of Fiverr International. Check out your portfolio center. Please also check ongoing floating volatility patterns of F1RA34 and Fiverr International.

Diversification Opportunities for F1RA34 and Fiverr International

0.75

Correlation Coefficient

F1RA34  Fiverr International

Poor diversification

The 3 months correlation between F1RA34 and Fiverr is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding F1RA34 and Fiverr International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiverr International and F1RA34 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 F1RA34 are associated (or correlated) with Fiverr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiverr International has no effect on the direction of F1RA34 i.e., F1RA34 and Fiverr International go up and down completely randomly.

Pair Corralation between F1RA34 and Fiverr International

Assuming the 90 days trading horizon F1RA34 is expected to generate 1.65 times less return on investment than Fiverr International. But when comparing it to its historical volatility, F1RA34 is 1.07 times less risky than Fiverr International. It trades about 0.11 of its potential returns per unit of risk. Fiverr International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  712.00  in Fiverr International on September 28, 2024 and sell it today you would earn a total of  272.00  from holding Fiverr International or generate 38.2% return on investment over 90 days.

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

F1RA34  vs.  Fiverr International

F1RA34

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in F1RA34 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, F1RA34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Fiverr International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiverr International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fiverr International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with F1RA34 and Fiverr International

The main advantage of trading using opposite F1RA34 and Fiverr International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F1RA34 position performs unexpectedly, Fiverr International 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 Fiverr International will offset losses from the drop in Fiverr International's long position.

The idea behind F1RA34 and Fiverr International 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.