Correlation Between Firan Technology and Bombardier
Can any of the company-specific risk be diversified away by investing in both Firan Technology and Bombardier 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 Firan Technology and Bombardier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firan Technology Group and Bombardier, you can compare the effects of market volatilities on Firan Technology and Bombardier 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 Firan Technology with a short position of Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firan Technology and Bombardier.
Diversification Opportunities for Firan Technology and Bombardier
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Firan and Bombardier is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Firan Technology 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 Firan Technology Group are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Firan Technology i.e., Firan Technology and Bombardier go up and down completely randomly.
Pair Corralation between Firan Technology and Bombardier
Assuming the 90 days trading horizon Firan Technology Group is expected to under-perform the Bombardier. In addition to that, Firan Technology is 1.05 times more volatile than Bombardier. It trades about -0.46 of its total potential returns per unit of risk. Bombardier is currently generating about -0.07 per unit of volatility. If you would invest 5,887 in Bombardier on January 24, 2024 and sell it today you would lose (165.00) from holding Bombardier or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firan Technology Group vs. Bombardier
Performance |
| Timeline |
| Firan Technology |
| Bombardier |
Firan Technology and Bombardier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firan Technology and Bombardier
The main advantage of trading using opposite Firan Technology and Bombardier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firan Technology position performs unexpectedly, Bombardier 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 Bombardier will offset losses from the drop in Bombardier's long position.| Firan Technology vs. Martinrea International | Firan Technology vs. Stantec | Firan Technology vs. Linamar |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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