Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Employers Holdings 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 Falcon Metals and Employers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals Limited and Employers Holdings, you can compare the effects of market volatilities on Falcon Metals and Employers Holdings 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 Falcon Metals with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Employers Holdings.
Diversification Opportunities for Falcon Metals and Employers Holdings
The 3 months correlation between Falcon and Employers is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals Limited and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and Falcon Metals 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 Falcon Metals Limited are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of Falcon Metals i.e., Falcon Metals and Employers Holdings go up and down completely randomly.
Pair Corralation between Falcon Metals and Employers Holdings
If you would invest 7.00 in Falcon Metals Limited on March 6, 2024 and sell it today you would earn a total of 0.00 from holding Falcon Metals Limited or generate 0.0% return on investment over 90 days.
Over the last 90 days Falcon Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Falcon Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Over the last 90 days Employers Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.