Correlation Between Dominion Energy and Federal National
Can any of the company-specific risk be diversified away by investing in both Dominion Energy and Federal National 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 Dominion Energy and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and Federal National Mortgage, you can compare the effects of market volatilities on Dominion Energy and Federal National 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 Dominion Energy with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and Federal National.
Diversification Opportunities for Dominion Energy and Federal National
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dominion and Federal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and Dominion 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 Dominion Energy are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Dominion Energy i.e., Dominion Energy and Federal National go up and down completely randomly.
Pair Corralation between Dominion Energy and Federal National
If you would invest 4,668 in Dominion Energy on January 26, 2024 and sell it today you would earn a total of 455.00 from holding Dominion Energy or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominion Energy vs. Federal National Mortgage
Performance |
| Timeline |
| Dominion Energy |
| Federal National Mortgage |
Dominion Energy and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and Federal National
The main advantage of trading using opposite Dominion Energy and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| Dominion Energy vs. Southern Company | Dominion Energy vs. American Electric Power | Dominion Energy vs. Nextera Energy | Dominion Energy vs. Consolidated Edison |
| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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