Correlation Between FUTURE GAMING and ARCHER DANIELS

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

By analyzing existing cross correlation between FUTURE GAMING GRP and ARCHER DANIELS MID, you can compare the effects of market volatilities on FUTURE GAMING and ARCHER DANIELS 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 FUTURE GAMING with a short position of ARCHER DANIELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURE GAMING and ARCHER DANIELS.

Diversification Opportunities for FUTURE GAMING and ARCHER DANIELS

0.13

Correlation Coefficient

FUTURE GAMING  ARCHER DANIELS

Average diversification

The 3 months correlation between FUTURE and ARCHER is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FUTURE GAMING GRP and ARCHER DANIELS MID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCHER DANIELS MID and FUTURE GAMING 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 FUTURE GAMING GRP are associated (or correlated) with ARCHER DANIELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCHER DANIELS MID has no effect on the direction of FUTURE GAMING i.e., FUTURE GAMING and ARCHER DANIELS go up and down completely randomly.

Pair Corralation between FUTURE GAMING and ARCHER DANIELS

Assuming the 90 days trading horizon FUTURE GAMING GRP is expected to generate 1.73 times more return on investment than ARCHER DANIELS. However, FUTURE GAMING is 1.73 times more volatile than ARCHER DANIELS MID. It trades about -0.01 of its potential returns per unit of risk. ARCHER DANIELS MID is currently generating about -0.04 per unit of risk. If you would invest  66.00  in FUTURE GAMING GRP on August 31, 2024 and sell it today you would lose (3.00) from holding FUTURE GAMING GRP or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

FUTURE GAMING GRP  vs.  ARCHER DANIELS MID

FUTURE GAMING GRP

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days FUTURE GAMING GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FUTURE GAMING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ARCHER DANIELS MID

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARCHER DANIELS MID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, ARCHER DANIELS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FUTURE GAMING and ARCHER DANIELS

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

The idea behind FUTURE GAMING GRP and ARCHER DANIELS MID 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.