Correlation Between Fulcrum Metals and American Homes
Can any of the company-specific risk be diversified away by investing in both Fulcrum Metals and American Homes 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 Fulcrum Metals and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulcrum Metals PLC and American Homes 4, you can compare the effects of market volatilities on Fulcrum Metals and American Homes 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 Fulcrum Metals with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Metals and American Homes.
Diversification Opportunities for Fulcrum Metals and American Homes
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fulcrum and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Metals PLC and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Fulcrum Metals 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 Fulcrum Metals PLC are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Fulcrum Metals i.e., Fulcrum Metals and American Homes go up and down completely randomly.
Pair Corralation between Fulcrum Metals and American Homes
Assuming the 90 days trading horizon Fulcrum Metals PLC is expected to generate 0.61 times more return on investment than American Homes. However, Fulcrum Metals PLC is 1.63 times less risky than American Homes. It trades about 0.22 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.12 per unit of risk. If you would invest 750.00 in Fulcrum Metals PLC on September 25, 2024 and sell it today you would earn a total of 25.00 from holding Fulcrum Metals PLC or generate 3.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Fulcrum Metals PLC vs. American Homes 4
Performance |
Timeline |
Fulcrum Metals PLC |
American Homes 4 |
Fulcrum Metals and American Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fulcrum Metals and American Homes
The main advantage of trading using opposite Fulcrum Metals and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Metals position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.Fulcrum Metals vs. Givaudan SA | Fulcrum Metals vs. Antofagasta PLC | Fulcrum Metals vs. Ferrexpo PLC | Fulcrum Metals vs. Atalaya Mining |
American Homes vs. Uniper SE | American Homes vs. Mulberry Group PLC | American Homes vs. London Security Plc | American Homes vs. Triad Group PLC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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