Correlation Between Fannie Mae and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and UPM Kymmene 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 Fannie Mae and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and UPM Kymmene Oyj, you can compare the effects of market volatilities on Fannie Mae and UPM Kymmene 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 Fannie Mae with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and UPM Kymmene.
Diversification Opportunities for Fannie Mae and UPM Kymmene
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fannie and UPM is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj and Fannie Mae 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 Fannie Mae are associated (or correlated) with UPM Kymmene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of Fannie Mae i.e., Fannie Mae and UPM Kymmene go up and down completely randomly.
Pair Corralation between Fannie Mae and UPM Kymmene
Assuming the 90 days trading horizon Fannie Mae is expected to generate 9.79 times more return on investment than UPM Kymmene. However, Fannie Mae is 9.79 times more volatile than UPM Kymmene Oyj. It trades about 0.33 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.33 per unit of risk. If you would invest 164.00 in Fannie Mae on August 24, 2024 and sell it today you would earn a total of 158.00 from holding Fannie Mae or generate 96.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Fannie Mae vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Fannie Mae |
| UPM Kymmene Oyj |
Fannie Mae and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fannie Mae and UPM Kymmene
The main advantage of trading using opposite Fannie Mae and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, UPM Kymmene 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 UPM Kymmene will offset losses from the drop in UPM Kymmene's long position.| Fannie Mae vs. Sydbank | Fannie Mae vs. Finnair Oyj | Fannie Mae vs. Mindflair Plc | Fannie Mae vs. Cincinnati Financial Corp |
| UPM Kymmene vs. Trainline Plc | UPM Kymmene vs. Broadcom | UPM Kymmene vs. Sydbank | UPM Kymmene vs. Bank of Ireland |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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