Correlation Between Federal Agricultural and Consumer Portfolio
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Consumer Portfolio 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 Agricultural and Consumer Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Consumer Portfolio Services, you can compare the effects of market volatilities on Federal Agricultural and Consumer Portfolio 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 Agricultural with a short position of Consumer Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Consumer Portfolio.
Diversification Opportunities for Federal Agricultural and Consumer Portfolio
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Consumer is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio and Federal Agricultural 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 Agricultural Mortgage are associated (or correlated) with Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Consumer Portfolio go up and down completely randomly.
Pair Corralation between Federal Agricultural and Consumer Portfolio
Considering the 90-day investment horizon Federal Agricultural Mortgage is expected to under-perform the Consumer Portfolio. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 1.75 times less risky than Consumer Portfolio. The stock trades about -0.06 of its potential returns per unit of risk. The Consumer Portfolio Services is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 844.00 in Consumer Portfolio Services on March 21, 2024 and sell it today you would earn a total of 5.00 from holding Consumer Portfolio Services or generate 0.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Federal Agricultural Mortgage vs. Consumer Portfolio Services
Performance |
Timeline |
Federal Agricultural |
Consumer Portfolio |
Federal Agricultural and Consumer Portfolio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal Agricultural and Consumer Portfolio
The main advantage of trading using opposite Federal Agricultural and Consumer Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Consumer Portfolio 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 Consumer Portfolio will offset losses from the drop in Consumer Portfolio's long position.Federal Agricultural vs. Xponential Fitness | Federal Agricultural vs. Griffon | Federal Agricultural vs. Coca Cola Consolidated | Federal Agricultural vs. Delaware Healthcare Fund |
Consumer Portfolio vs. Xponential Fitness | Consumer Portfolio vs. Griffon | Consumer Portfolio vs. Coca Cola Consolidated | Consumer Portfolio vs. Delaware Healthcare Fund |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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