Correlation Between Fannie Mae and Canadian General
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and Canadian General 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 Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and Canadian General Investments, you can compare the effects of market volatilities on Fannie Mae and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and Canadian General.
Diversification Opportunities for Fannie Mae and Canadian General
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fannie and Canadian is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Fannie Mae i.e., Fannie Mae and Canadian General go up and down completely randomly.
Pair Corralation between Fannie Mae and Canadian General
Assuming the 90 days trading horizon Fannie Mae is expected to generate 6.21 times more return on investment than Canadian General. However, Fannie Mae is 6.21 times more volatile than Canadian General Investments. It trades about 0.23 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.04 per unit of risk. If you would invest 134.00 in Fannie Mae on October 26, 2024 and sell it today you would earn a total of 527.00 from holding Fannie Mae or generate 393.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.0% |
| Values | Daily Returns |
Fannie Mae vs. Canadian General Investments
Performance |
| Timeline |
| Fannie Mae |
| Canadian General Inv |
Fannie Mae and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fannie Mae and Canadian General
The main advantage of trading using opposite Fannie Mae and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, Canadian General 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 Canadian General will offset losses from the drop in Canadian General's long position.| Fannie Mae vs. Canadian General Investments | Fannie Mae vs. JPMorgan Japanese Investment | Fannie Mae vs. Empire Metals Limited | Fannie Mae vs. Blackrock World Mining |
| Canadian General vs. SBM Offshore NV | Canadian General vs. Molson Coors Beverage | Canadian General vs. VPC Specialty Lending | Canadian General vs. Axway Software SA |
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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