Correlation Between Federal Realty and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Federal Realty and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Litigation Capital.
Diversification Opportunities for Federal Realty and Litigation Capital
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Litigation is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Federal Realty i.e., Federal Realty and Litigation Capital go up and down completely randomly.
Pair Corralation between Federal Realty and Litigation Capital
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 1.01 times more return on investment than Litigation Capital. However, Federal Realty is 1.01 times more volatile than Litigation Capital Management. It trades about 0.37 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.22 per unit of risk. If you would invest 11,118 in Federal Realty Investment on September 3, 2024 and sell it today you would earn a total of 635.00 from holding Federal Realty Investment or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Federal Realty Investment vs. Litigation Capital Management
Performance |
| Timeline |
| Federal Realty Investment |
| Litigation Capital |
Federal Realty and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Litigation Capital
The main advantage of trading using opposite Federal Realty and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital'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 |
| Litigation Capital vs. Federal Realty Investment | Litigation Capital vs. The Investment | Litigation Capital vs. Applied Materials | Litigation Capital vs. Bankers Investment Trust |
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 Stocks Directory module to find actively traded stocks across global markets.
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