Correlation Between Fannie Mae and Helios Towers
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and Helios Towers 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 Helios Towers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and Helios Towers Plc, you can compare the effects of market volatilities on Fannie Mae and Helios Towers 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 Helios Towers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and Helios Towers.
Diversification Opportunities for Fannie Mae and Helios Towers
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fannie and Helios is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and Helios Towers Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Towers Plc 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 Helios Towers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Towers Plc has no effect on the direction of Fannie Mae i.e., Fannie Mae and Helios Towers go up and down completely randomly.
Pair Corralation between Fannie Mae and Helios Towers
Assuming the 90 days trading horizon Fannie Mae is expected to generate 9.53 times more return on investment than Helios Towers. However, Fannie Mae is 9.53 times more volatile than Helios Towers Plc. It trades about 0.48 of its potential returns per unit of risk. Helios Towers Plc is currently generating about -0.03 per unit of risk. If you would invest 259.00 in Fannie Mae on October 25, 2024 and sell it today you would earn a total of 414.00 from holding Fannie Mae or generate 159.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Fannie Mae vs. Helios Towers Plc
Performance |
| Timeline |
| Fannie Mae |
| Helios Towers Plc |
Fannie Mae and Helios Towers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fannie Mae and Helios Towers
The main advantage of trading using opposite Fannie Mae and Helios Towers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, Helios Towers 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 Helios Towers will offset losses from the drop in Helios Towers' long position.| Fannie Mae vs. Batm Advanced Communications | Fannie Mae vs. Metro Bank PLC | Fannie Mae vs. Manulife Financial Corp | Fannie Mae vs. Ameriprise Financial |
| Helios Towers vs. Discover Financial Services | Helios Towers vs. Geely Automobile Holdings | Helios Towers vs. SoftBank Group Corp | Helios Towers vs. SBM Offshore NV |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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