Correlation Between AFC Energy and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both AFC Energy and Fortune Brands 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 AFC Energy and Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFC Energy plc and Fortune Brands Home, you can compare the effects of market volatilities on AFC Energy and Fortune Brands 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 AFC Energy with a short position of Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Energy and Fortune Brands.
Diversification Opportunities for AFC Energy and Fortune Brands
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AFC and Fortune is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding AFC Energy plc and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home and AFC Energy 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 AFC Energy plc are associated (or correlated) with Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of AFC Energy i.e., AFC Energy and Fortune Brands go up and down completely randomly.
Pair Corralation between AFC Energy and Fortune Brands
Assuming the 90 days trading horizon AFC Energy plc is expected to generate 2.71 times more return on investment than Fortune Brands. However, AFC Energy is 2.71 times more volatile than Fortune Brands Home. It trades about 0.16 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.01 per unit of risk. If you would invest 550.00 in AFC Energy plc on April 20, 2025 and sell it today you would earn a total of 522.00 from holding AFC Energy plc or generate 94.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 74.19% |
Values | Daily Returns |
AFC Energy plc vs. Fortune Brands Home
Performance |
Timeline |
AFC Energy plc |
Fortune Brands Home |
AFC Energy and Fortune Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AFC Energy and Fortune Brands
The main advantage of trading using opposite AFC Energy and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFC Energy position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.AFC Energy vs. Central Asia Metals | AFC Energy vs. Bisichi Mining PLC | AFC Energy vs. Metals Exploration Plc | AFC Energy vs. Thor Mining 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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