Correlation Between ForFarmers and Wolters Kluwer

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

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

Diversification Opportunities for ForFarmers and Wolters Kluwer

0.85

Correlation Coefficient

ForFarmers  Wolters Kluwer

Very poor diversification

The 3 months correlation between ForFarmers and Wolters is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ForFarmers NV and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV and ForFarmers 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 ForFarmers NV are associated (or correlated) with Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of ForFarmers i.e., ForFarmers and Wolters Kluwer go up and down completely randomly.

Pair Corralation between ForFarmers and Wolters Kluwer

Assuming the 90 days trading horizon ForFarmers NV is expected to generate 1.32 times more return on investment than Wolters Kluwer. However, ForFarmers is 1.32 times more volatile than Wolters Kluwer NV. It trades about -0.03 of its potential returns per unit of risk. Wolters Kluwer NV is currently generating about -0.09 per unit of risk. If you would invest  401.00  in ForFarmers NV on April 21, 2025 and sell it today you would lose (13.00) from holding ForFarmers NV or give up 3.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

ForFarmers NV  vs.  Wolters Kluwer NV

ForFarmers NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days ForFarmers NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ForFarmers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wolters Kluwer NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Wolters Kluwer is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ForFarmers and Wolters Kluwer

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

The idea behind ForFarmers NV and Wolters Kluwer NV 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.