Correlation Between FLM and Industrial Select
Can any of the company-specific risk be diversified away by investing in both FLM and Industrial Select 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 FLM and Industrial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLM and Industrial Select Sector, you can compare the effects of market volatilities on FLM and Industrial Select 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 FLM with a short position of Industrial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLM and Industrial Select.
Diversification Opportunities for FLM and Industrial Select
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FLM and Industrial is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding FLM and Industrial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Select Sector and FLM 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 FLM are associated (or correlated) with Industrial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Select Sector has no effect on the direction of FLM i.e., FLM and Industrial Select go up and down completely randomly.
Pair Corralation between FLM and Industrial Select
If you would invest 5,639 in FLM on January 24, 2024 and sell it today you would earn a total of 0.00 from holding FLM or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 4.76% |
Values | Daily Returns |
FLM vs. Industrial Select Sector
Performance |
Timeline |
FLM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Excellent
Industrial Select Sector |
FLM and Industrial Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FLM and Industrial Select
The main advantage of trading using opposite FLM and Industrial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLM position performs unexpectedly, Industrial Select 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 Industrial Select will offset losses from the drop in Industrial Select's long position.FLM vs. Materials Select Sector | FLM vs. Consumer Discretionary Select | FLM vs. Consumer Staples Select | FLM vs. Health Care Select |
Industrial Select vs. Materials Select Sector | Industrial Select vs. Consumer Discretionary Select | Industrial Select vs. Consumer Staples Select | Industrial Select vs. Health Care Select |
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 CEOs Directory module to screen CEOs from public companies around the world.
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