Correlation Between Freddie Mac and Edita Food
Can any of the company-specific risk be diversified away by investing in both Freddie Mac and Edita Food 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 Freddie Mac and Edita Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freddie Mac and Edita Food Industries, you can compare the effects of market volatilities on Freddie Mac and Edita Food 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 Freddie Mac with a short position of Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freddie Mac and Edita Food.
Diversification Opportunities for Freddie Mac and Edita Food
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Freddie and Edita is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Freddie Mac and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Freddie Mac 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 Freddie Mac are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Freddie Mac i.e., Freddie Mac and Edita Food go up and down completely randomly.
Pair Corralation between Freddie Mac and Edita Food
If you would invest 594.00 in Freddie Mac on November 18, 2024 and sell it today you would earn a total of 38.00 from holding Freddie Mac or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freddie Mac vs. Edita Food Industries
Performance |
| Timeline |
| Freddie Mac |
| Edita Food Industries |
Freddie Mac and Edita Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freddie Mac and Edita Food
The main advantage of trading using opposite Freddie Mac and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freddie Mac position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.| Freddie Mac vs. Spire Healthcare Group | Freddie Mac vs. Jupiter Fund Management | Freddie Mac vs. United Utilities Group | Freddie Mac vs. Waste Management |
| Edita Food vs. Spirent Communications plc | Edita Food vs. Check Point Software | Edita Food vs. Fonix Mobile plc | Edita Food vs. Geely Automobile Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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