Correlation Between Footway Group and International Business
Can any of the company-specific risk be diversified away by investing in both Footway Group and International Business 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 Footway Group and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Footway Group AB and International Business Machines, you can compare the effects of market volatilities on Footway Group and International Business 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 Footway Group with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Footway Group and International Business.
Diversification Opportunities for Footway Group and International Business
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Footway and International is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Footway Group AB and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Footway Group 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 Footway Group AB are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Footway Group i.e., Footway Group and International Business go up and down completely randomly.
Pair Corralation between Footway Group and International Business
Assuming the 90 days trading horizon Footway Group AB is expected to under-perform the International Business. In addition to that, Footway Group is 5.72 times more volatile than International Business Machines. It trades about -0.19 of its total potential returns per unit of risk. International Business Machines is currently generating about -0.12 per unit of volatility. If you would invest 18,850 in International Business Machines on January 26, 2024 and sell it today you would lose (440.00) from holding International Business Machines or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Footway Group AB vs. International Business Machine
Performance |
| Timeline |
| Footway Group AB |
| International Business |
Footway Group and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Footway Group and International Business
The main advantage of trading using opposite Footway Group and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Footway Group position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Footway Group vs. Qliro AB | Footway Group vs. Clas Ohlson AB | Footway Group vs. Byggmax Group AB | Footway Group vs. Boozt AB |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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