Correlation Between Federal National and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both Federal National and Hochschild Mining 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 National and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and Hochschild Mining PLC, you can compare the effects of market volatilities on Federal National and Hochschild Mining 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 National with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Hochschild Mining.
Diversification Opportunities for Federal National and Hochschild Mining
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and Hochschild is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Hochschild Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining PLC and Federal National 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 National Mortgage are associated (or correlated) with Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining PLC has no effect on the direction of Federal National i.e., Federal National and Hochschild Mining go up and down completely randomly.
Pair Corralation between Federal National and Hochschild Mining
Assuming the 90 days horizon Federal National Mortgage is expected to generate 1.04 times more return on investment than Hochschild Mining. However, Federal National is 1.04 times more volatile than Hochschild Mining PLC. It trades about 0.04 of its potential returns per unit of risk. Hochschild Mining PLC is currently generating about 0.02 per unit of risk. If you would invest 925,000 in Federal National Mortgage on December 30, 2023 and sell it today you would earn a total of 275,000 from holding Federal National Mortgage or generate 29.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Federal National Mortgage vs. Hochschild Mining PLC
Performance |
Timeline |
Federal National Mortgage |
Hochschild Mining PLC |
Federal National and Hochschild Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal National and Hochschild Mining
The main advantage of trading using opposite Federal National and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining's long position.Federal National vs. Paranovus Entertainment Technology | Federal National vs. Sphere Entertainment Co | Federal National vs. Glacier Bancorp | Federal National vs. KeyCorp |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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