Correlation Between Open Text and Flushing Financial
Can any of the company-specific risk be diversified away by investing in both Open Text and Flushing Financial 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 Open Text and Flushing Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Open Text Corp and Flushing Financial, you can compare the effects of market volatilities on Open Text and Flushing Financial 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 Open Text with a short position of Flushing Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Text and Flushing Financial.
Diversification Opportunities for Open Text and Flushing Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Open and Flushing is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Open Text Corp and Flushing Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flushing Financial and Open Text 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 Open Text Corp are associated (or correlated) with Flushing Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flushing Financial has no effect on the direction of Open Text i.e., Open Text and Flushing Financial go up and down completely randomly.
Pair Corralation between Open Text and Flushing Financial
Given the investment horizon of 90 days Open Text Corp is expected to generate 0.68 times more return on investment than Flushing Financial. However, Open Text Corp is 1.48 times less risky than Flushing Financial. It trades about -0.06 of its potential returns per unit of risk. Flushing Financial is currently generating about -0.14 per unit of risk. If you would invest 4,175 in Open Text Corp on December 29, 2023 and sell it today you would lose (292.00) from holding Open Text Corp or give up 6.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Open Text Corp vs. Flushing Financial
Performance |
Timeline |
Open Text Corp |
Flushing Financial |
Open Text and Flushing Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Open Text and Flushing Financial
The main advantage of trading using opposite Open Text and Flushing Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Text position performs unexpectedly, Flushing Financial 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 Flushing Financial will offset losses from the drop in Flushing Financial's long position.Open Text vs. Twin Vee Powercats | Open Text vs. Gentex | Open Text vs. Brunswick | Open Text vs. Playtech Plc |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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