Correlation Between Fannie Mae and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and Ecclesiastical Insurance 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 Ecclesiastical Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and Ecclesiastical Insurance Office, you can compare the effects of market volatilities on Fannie Mae and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and Ecclesiastical Insurance.
Diversification Opportunities for Fannie Mae and Ecclesiastical Insurance
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fannie and Ecclesiastical is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of Fannie Mae i.e., Fannie Mae and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between Fannie Mae and Ecclesiastical Insurance
Assuming the 90 days trading horizon Fannie Mae is expected to generate 9.86 times more return on investment than Ecclesiastical Insurance. However, Fannie Mae is 9.86 times more volatile than Ecclesiastical Insurance Office. It trades about 0.38 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about -0.05 per unit of risk. If you would invest 138.00 in Fannie Mae on September 1, 2024 and sell it today you would earn a total of 176.00 from holding Fannie Mae or generate 127.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fannie Mae vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| Fannie Mae |
| Ecclesiastical Insurance |
Fannie Mae and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fannie Mae and Ecclesiastical Insurance
The main advantage of trading using opposite Fannie Mae and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance's long position.| Fannie Mae vs. Uniper SE | Fannie Mae vs. Mulberry Group PLC | Fannie Mae vs. London Security Plc | Fannie Mae vs. Triad Group PLC |
| Ecclesiastical Insurance vs. Toyota Motor Corp | Ecclesiastical Insurance vs. SoftBank Group Corp | Ecclesiastical Insurance vs. Fannie Mae | Ecclesiastical Insurance vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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