Correlation Between Federal Realty and Carlsberg
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Carlsberg 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 Federal Realty and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Realty Investment and Carlsberg AS B, you can compare the effects of market volatilities on Federal Realty and Carlsberg 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 Federal Realty with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Carlsberg.
Diversification Opportunities for Federal Realty and Carlsberg
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Carlsberg is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Carlsberg AS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS B and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS B has no effect on the direction of Federal Realty i.e., Federal Realty and Carlsberg go up and down completely randomly.
Pair Corralation between Federal Realty and Carlsberg
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 0.51 times more return on investment than Carlsberg. However, Federal Realty Investment is 1.94 times less risky than Carlsberg. It trades about 0.14 of its potential returns per unit of risk. Carlsberg AS B is currently generating about -0.16 per unit of risk. If you would invest 11,343 in Federal Realty Investment on August 27, 2024 and sell it today you would earn a total of 272.00 from holding Federal Realty Investment or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Carlsberg AS B
Performance |
| Timeline |
| Federal Realty Investment |
| Carlsberg AS B |
Federal Realty and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Carlsberg
The main advantage of trading using opposite Federal Realty and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Carlsberg 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 Carlsberg will offset losses from the drop in Carlsberg's long position.| Federal Realty vs. Adriatic Metals | Federal Realty vs. Aeorema Communications Plc | Federal Realty vs. Empire Metals Limited | Federal Realty vs. Gaztransport et Technigaz |
| Carlsberg vs. Darden Restaurants | Carlsberg vs. Thor Mining PLC | Carlsberg vs. Bisichi Mining PLC | Carlsberg vs. Ion Beam Applications |
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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