Correlation Between Federal Realty and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Aberforth Smaller 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 Aberforth Smaller 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 Aberforth Smaller Companies, you can compare the effects of market volatilities on Federal Realty and Aberforth Smaller 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 Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Aberforth Smaller.
Diversification Opportunities for Federal Realty and Aberforth Smaller
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Aberforth is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller 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 Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of Federal Realty i.e., Federal Realty and Aberforth Smaller go up and down completely randomly.
Pair Corralation between Federal Realty and Aberforth Smaller
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 0.89 times more return on investment than Aberforth Smaller. However, Federal Realty Investment is 1.13 times less risky than Aberforth Smaller. It trades about 0.15 of its potential returns per unit of risk. Aberforth Smaller Companies is currently generating about -0.18 per unit of risk. If you would invest 11,412 in Federal Realty Investment on August 31, 2024 and sell it today you would earn a total of 344.00 from holding Federal Realty Investment or generate 3.01% 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. Aberforth Smaller Companies
Performance |
| Timeline |
| Federal Realty Investment |
| Aberforth Smaller |
Federal Realty and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Aberforth Smaller
The main advantage of trading using opposite Federal Realty and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.| Federal Realty vs. Mindflair Plc | Federal Realty vs. Sealed Air Corp | Federal Realty vs. Worldwide Healthcare Trust | Federal Realty vs. Fair Oaks Income |
| Aberforth Smaller vs. Wheaton Precious Metals | Aberforth Smaller vs. CompuGroup Medical AG | Aberforth Smaller vs. Futura Medical | Aberforth Smaller vs. Axfood AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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