Correlation Between TrueBlue and Futuris

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

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

Diversification Opportunities for TrueBlue and Futuris

0.19

Correlation Coefficient

TrueBlue  Futuris

Average diversification

The 3 months correlation between TrueBlue and Futuris is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TrueBlue and Futuris Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuris Company and TrueBlue 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 TrueBlue are associated (or correlated) with Futuris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuris Company has no effect on the direction of TrueBlue i.e., TrueBlue and Futuris go up and down completely randomly.

Pair Corralation between TrueBlue and Futuris

Considering the 90-day investment horizon TrueBlue is expected to generate 3.72 times less return on investment than Futuris. But when comparing it to its historical volatility, TrueBlue is 2.36 times less risky than Futuris. It trades about 0.05 of its potential returns per unit of risk. Futuris Company is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.41  in Futuris Company on September 5, 2024 and sell it today you would earn a total of  0.10  from holding Futuris Company or generate 7.09% return on investment over 90 days.

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

TrueBlue  vs.  Futuris Company

TrueBlue

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TrueBlue are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, TrueBlue is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Futuris Company

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Futuris Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Futuris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TrueBlue and Futuris

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

The idea behind TrueBlue and Futuris Company 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.