Correlation Between Federal Realty and Waste Management
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Federal Realty and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Waste Management.
Diversification Opportunities for Federal Realty and Waste Management
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Federal and Waste is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Federal Realty i.e., Federal Realty and Waste Management go up and down completely randomly.
Pair Corralation between Federal Realty and Waste Management
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 0.76 times more return on investment than Waste Management. However, Federal Realty Investment is 1.32 times less risky than Waste Management. It trades about 0.13 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest 9,948 in Federal Realty Investment on September 3, 2024 and sell it today you would earn a total of 1,514 from holding Federal Realty Investment or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.12% |
| Values | Daily Returns |
Federal Realty Investment vs. Waste Management
Performance |
| Timeline |
| Federal Realty Investment |
| Waste Management |
Federal Realty and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Waste Management
The main advantage of trading using opposite Federal Realty and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Federal Realty vs. Amedeo Air Four | Federal Realty vs. Sealed Air Corp | Federal Realty vs. European Metals Holdings | Federal Realty vs. Pentair PLC |
| Waste Management vs. Catalyst Media Group | Waste Management vs. CATLIN GROUP | Waste Management vs. RTW Venture Fund | Waste Management vs. Secure Property Development |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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