Correlation Between Federal Realty and Caffyns PLC
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Caffyns PLC 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 Caffyns PLC 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 Caffyns PLC, you can compare the effects of market volatilities on Federal Realty and Caffyns PLC 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 Caffyns PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Caffyns PLC.
Diversification Opportunities for Federal Realty and Caffyns PLC
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Caffyns is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Caffyns PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caffyns PLC 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 Caffyns PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caffyns PLC has no effect on the direction of Federal Realty i.e., Federal Realty and Caffyns PLC go up and down completely randomly.
Pair Corralation between Federal Realty and Caffyns PLC
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 0.46 times more return on investment than Caffyns PLC. However, Federal Realty Investment is 2.19 times less risky than Caffyns PLC. It trades about 0.3 of its potential returns per unit of risk. Caffyns PLC is currently generating about 0.01 per unit of risk. If you would invest 11,186 in Federal Realty Investment on September 1, 2024 and sell it today you would earn a total of 570.00 from holding Federal Realty Investment or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Federal Realty Investment vs. Caffyns PLC
Performance |
| Timeline |
| Federal Realty Investment |
| Caffyns PLC |
Federal Realty and Caffyns PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Caffyns PLC
The main advantage of trading using opposite Federal Realty and Caffyns PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Caffyns PLC 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 Caffyns PLC will offset losses from the drop in Caffyns PLC's long position.| Federal Realty vs. FC Investment Trust | Federal Realty vs. Batm Advanced Communications | Federal Realty vs. Verizon Communications | Federal Realty vs. Cellnex Telecom SA |
| Caffyns PLC vs. Air Products Chemicals | Caffyns PLC vs. Omega Healthcare Investors | Caffyns PLC vs. Induction Healthcare Group | Caffyns PLC vs. Universal Health Services |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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