Correlation Between Federal Home and Big Lots
Can any of the company-specific risk be diversified away by investing in both Federal Home and Big Lots 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 Federal Home and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home Loan and Big Lots, you can compare the effects of market volatilities on Federal Home and Big Lots 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 Federal Home with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Big Lots.
Diversification Opportunities for Federal Home and Big Lots
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Big is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and Federal Home 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 Federal Home Loan are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Federal Home i.e., Federal Home and Big Lots go up and down completely randomly.
Pair Corralation between Federal Home and Big Lots
Assuming the 90 days horizon Federal Home Loan is expected to generate 0.42 times more return on investment than Big Lots. However, Federal Home Loan is 2.37 times less risky than Big Lots. It trades about -0.02 of its potential returns per unit of risk. Big Lots is currently generating about -0.03 per unit of risk. If you would invest 610.00 in Federal Home Loan on January 26, 2024 and sell it today you would lose (10.00) from holding Federal Home Loan or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. Big Lots
Performance |
| Timeline |
| Federal Home Loan |
| Big Lots |
Federal Home and Big Lots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Big Lots
The main advantage of trading using opposite Federal Home and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.| Federal Home vs. Federal Home Loan | Federal Home vs. Federal National Mortgage | Federal Home vs. Federal Home Loan | Federal Home vs. Federal Home Loan |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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