Correlation Between FMC Corp and Federal Realty
Can any of the company-specific risk be diversified away by investing in both FMC Corp 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 FMC Corp and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FMC Corp and Federal Realty Investment, you can compare the effects of market volatilities on FMC Corp 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 FMC Corp with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMC Corp and Federal Realty.
Diversification Opportunities for FMC Corp and Federal Realty
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FMC and Federal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp 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 FMC 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 FMC Corp 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 FMC Corp i.e., FMC Corp and Federal Realty go up and down completely randomly.
Pair Corralation between FMC Corp and Federal Realty
Assuming the 90 days trading horizon FMC Corp is expected to under-perform the Federal Realty. In addition to that, FMC Corp is 2.34 times more volatile than Federal Realty Investment. It trades about -0.04 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about 0.07 per unit of volatility. If you would invest 11,327 in Federal Realty Investment on September 3, 2024 and sell it today you would earn a total of 426.00 from holding Federal Realty Investment or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
FMC Corp vs. Federal Realty Investment
Performance |
| Timeline |
| FMC Corp |
| Federal Realty Investment |
FMC Corp and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FMC Corp and Federal Realty
The main advantage of trading using opposite FMC Corp and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMC Corp 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.| FMC Corp vs. Federal Realty Investment | FMC Corp vs. Europa Metals | FMC Corp vs. SilverCrest Metals | FMC Corp vs. Schroders Investment Trusts |
| Federal Realty vs. Amedeo Air Four | Federal Realty vs. Sealed Air Corp | Federal Realty vs. European Metals Holdings | Federal Realty vs. Pentair PLC |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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