Correlation Between Fanuc and Dover

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

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

Diversification Opportunities for Fanuc and Dover

-0.15

Correlation Coefficient

Fanuc  Dover

Good diversification

The 3 months correlation between Fanuc and Dover is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fanuc and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover and Fanuc 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 Fanuc are associated (or correlated) with Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of Fanuc i.e., Fanuc and Dover go up and down completely randomly.

Pair Corralation between Fanuc and Dover

Assuming the 90 days horizon Fanuc is expected to generate 21.75 times less return on investment than Dover. In addition to that, Fanuc is 1.39 times more volatile than Dover. It trades about 0.0 of its total potential returns per unit of risk. Dover is currently generating about 0.1 per unit of volatility. If you would invest  13,735  in Dover on September 12, 2024 and sell it today you would earn a total of  6,396  from holding Dover or generate 46.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Fanuc  vs.  Dover

Fanuc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fanuc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dover

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dover are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dover may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fanuc and Dover

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

The idea behind Fanuc and Dover 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.