Correlation Between Forward Industries and Phoenix Footwear

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

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

Diversification Opportunities for Forward Industries and Phoenix Footwear

-0.11

Correlation Coefficient

Forward Industries  Phoenix Footwear

Good diversification

The 3 months correlation between Forward and Phoenix is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Forward Industries and Phoenix Footwear Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Footwear and Forward Industries 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 Forward Industries are associated (or correlated) with Phoenix Footwear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Footwear has no effect on the direction of Forward Industries i.e., Forward Industries and Phoenix Footwear go up and down completely randomly.

Pair Corralation between Forward Industries and Phoenix Footwear

If you would invest  368.00  in Forward Industries on September 17, 2024 and sell it today you would earn a total of  86.00  from holding Forward Industries or generate 23.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Forward Industries  vs.  Phoenix Footwear Group

Forward Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Forward Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Forward Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Phoenix Footwear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phoenix Footwear Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Phoenix Footwear is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Forward Industries and Phoenix Footwear

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

The idea behind Forward Industries and Phoenix Footwear Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..