Correlation Between Charter Communications and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Charter Communications and Federal Realty 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 Charter Communications and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Federal Realty Investment, you can compare the effects of market volatilities on Charter Communications and Federal Realty 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 Charter Communications with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Federal Realty.
Diversification Opportunities for Charter Communications and Federal Realty
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Charter and Federal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Charter Communications i.e., Charter Communications and Federal Realty go up and down completely randomly.
Pair Corralation between Charter Communications and Federal Realty
Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 1.66 times more return on investment than Federal Realty. However, Charter Communications is 1.66 times more volatile than Federal Realty Investment. It trades about 0.02 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.04 per unit of risk. If you would invest 33,764 in Charter Communications Cl on September 14, 2024 and sell it today you would earn a total of 4,833 from holding Charter Communications Cl or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.01% |
| Values | Daily Returns |
Charter Communications Cl vs. Federal Realty Investment
Performance |
| Timeline |
| Charter Communications |
| Federal Realty Investment |
Charter Communications and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Federal Realty
The main advantage of trading using opposite Charter Communications and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Federal Realty 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 Realty will offset losses from the drop in Federal Realty's long position.| Charter Communications vs. Fevertree Drinks Plc | Charter Communications vs. Centaur Media | Charter Communications vs. Liberty Media Corp | Charter Communications vs. XLMedia PLC |
| Federal Realty vs. Sparebank 1 SR | Federal Realty vs. MT Bank Corp | Federal Realty vs. Charter Communications Cl | Federal Realty vs. Discover Financial Services |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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