Correlation Between Freddie Mac and Young Cos
Can any of the company-specific risk be diversified away by investing in both Freddie Mac and Young Cos 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 Young Cos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freddie Mac and Young Cos Brewery, you can compare the effects of market volatilities on Freddie Mac and Young Cos 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 Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freddie Mac and Young Cos.
Diversification Opportunities for Freddie Mac and Young Cos
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Freddie and Young is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Freddie Mac and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery 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 Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of Freddie Mac i.e., Freddie Mac and Young Cos go up and down completely randomly.
Pair Corralation between Freddie Mac and Young Cos
Assuming the 90 days trading horizon Freddie Mac is expected to generate 7.09 times more return on investment than Young Cos. However, Freddie Mac is 7.09 times more volatile than Young Cos Brewery. It trades about 0.43 of its potential returns per unit of risk. Young Cos Brewery is currently generating about 0.13 per unit of risk. If you would invest 134.00 in Freddie Mac on August 29, 2024 and sell it today you would earn a total of 193.00 from holding Freddie Mac or generate 144.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freddie Mac vs. Young Cos Brewery
Performance |
| Timeline |
| Freddie Mac |
| Young Cos Brewery |
Freddie Mac and Young Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freddie Mac and Young Cos
The main advantage of trading using opposite Freddie Mac and Young Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freddie Mac position performs unexpectedly, Young Cos 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 Young Cos will offset losses from the drop in Young Cos' long position.| Freddie Mac vs. Samsung Electronics Co | Freddie Mac vs. Samsung Electronics Co | Freddie Mac vs. Hyundai Motor | Freddie Mac vs. Toyota Motor Corp |
| Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co | Young Cos vs. Toyota Motor Corp | Young Cos vs. Hon Hai Precision |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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