Correlation Between Topbuild Corp and Fednat Holding

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

By analyzing existing cross correlation between Topbuild Corp and Fednat Holding Co, you can compare the effects of market volatilities on Topbuild Corp and Fednat Holding 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 Topbuild Corp with a short position of Fednat Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Topbuild Corp and Fednat Holding.

Diversification Opportunities for Topbuild Corp and Fednat Holding

-0.5

Correlation Coefficient

Topbuild Corp  Fednat Holding

Very good diversification

The 3 months correlation between Topbuild and Fednat is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and Fednat Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fednat Holding and Topbuild Corp 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 Topbuild Corp are associated (or correlated) with Fednat Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fednat Holding has no effect on the direction of Topbuild Corp i.e., Topbuild Corp and Fednat Holding go up and down completely randomly.

Pair Corralation between Topbuild Corp and Fednat Holding

If you would invest  0.16  in Fednat Holding Co on January 31, 2024 and sell it today you would earn a total of  0.00  from holding Fednat Holding Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Topbuild Corp  vs.  Fednat Holding Co

Topbuild Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Topbuild Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Topbuild Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fednat Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Topbuild Corp and Fednat Holding

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

The idea behind Topbuild Corp and Fednat Holding Co 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.