Correlation Between FactSet Research and Twitter

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

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

Diversification Opportunities for FactSet Research and Twitter

-0.4

Correlation Coefficient

FactSet Research  Twitter

Very good diversification

The 3 months correlation between FactSet and Twitter is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter and FactSet Research 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 FactSet Research Systems are associated (or correlated) with Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of FactSet Research i.e., FactSet Research and Twitter go up and down completely randomly.

Pair Corralation between FactSet Research and Twitter

If you would invest  5,370  in Twitter on March 19, 2024 and sell it today you would earn a total of  0.00  from holding Twitter or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.88%
Values	Daily Returns

FactSet Research Systems  vs.  Twitter

FactSet Research Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Twitter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FactSet Research and Twitter

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

The idea behind FactSet Research Systems and Twitter 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.