Correlation Between Federal Realty and Hyundai
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Federal Realty and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Hyundai.
Diversification Opportunities for Federal Realty and Hyundai
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Hyundai is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Federal Realty i.e., Federal Realty and Hyundai go up and down completely randomly.
Pair Corralation between Federal Realty and Hyundai
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 0.35 times more return on investment than Hyundai. However, Federal Realty Investment is 2.83 times less risky than Hyundai. It trades about 0.13 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.1 per unit of risk. If you would invest 11,118 in Federal Realty Investment on September 5, 2024 and sell it today you would earn a total of 290.00 from holding Federal Realty Investment or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federal Realty Investment vs. Hyundai Motor
Performance |
| Timeline |
| Federal Realty Investment |
| Hyundai Motor |
Federal Realty and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Hyundai
The main advantage of trading using opposite Federal Realty and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.| Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Hyundai Motor | Federal Realty vs. Toyota Motor Corp |
| Hyundai vs. New Residential Investment | Hyundai vs. Bankers Investment Trust | Hyundai vs. Federal Realty Investment | Hyundai vs. MTI Wireless Edge |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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