Correlation Between Fannie Mae and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and Compagnie Plastic 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 Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Fannie Mae and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and Compagnie Plastic.
Diversification Opportunities for Fannie Mae and Compagnie Plastic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fannie and Compagnie is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Fannie Mae i.e., Fannie Mae and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Fannie Mae and Compagnie Plastic
Assuming the 90 days trading horizon Fannie Mae is expected to generate 2.87 times more return on investment than Compagnie Plastic. However, Fannie Mae is 2.87 times more volatile than Compagnie Plastic Omnium. It trades about 0.14 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest 48.00 in Fannie Mae on November 1, 2024 and sell it today you would earn a total of 510.00 from holding Fannie Mae or generate 1062.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.39% |
| Values | Daily Returns |
Fannie Mae vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Fannie Mae |
| Compagnie Plastic Omnium |
Fannie Mae and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fannie Mae and Compagnie Plastic
The main advantage of trading using opposite Fannie Mae and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Fannie Mae vs. Synthomer plc | Fannie Mae vs. Ecclesiastical Insurance Office | Fannie Mae vs. Livermore Investments Group | Fannie Mae vs. Lindsell Train Investment |
| Compagnie Plastic vs. Ubisoft Entertainment | Compagnie Plastic vs. JD Sports Fashion | Compagnie Plastic vs. Seche Environnement SA | Compagnie Plastic vs. Air Products Chemicals |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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