Correlation Between Federal Realty and Oakley Capital
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Oakley 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 Oakley 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 Oakley Capital Investments, you can compare the effects of market volatilities on Federal Realty and Oakley 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 Oakley Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Oakley Capital.
Diversification Opportunities for Federal Realty and Oakley Capital
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Oakley is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of Federal Realty i.e., Federal Realty and Oakley Capital go up and down completely randomly.
Pair Corralation between Federal Realty and Oakley Capital
Assuming the 90 days trading horizon Federal Realty Investment is expected to generate 1.26 times more return on investment than Oakley Capital. However, Federal Realty is 1.26 times more volatile than Oakley Capital Investments. It trades about 0.14 of its potential returns per unit of risk. Oakley Capital Investments is currently generating about -0.12 per unit of risk. If you would invest 11,343 in Federal Realty Investment on August 28, 2024 and sell it today you would earn a total of 272.00 from holding Federal Realty Investment or generate 2.4% 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. Oakley Capital Investments
Performance |
| Timeline |
| Federal Realty Investment |
| Oakley Capital Inves |
Federal Realty and Oakley Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Oakley Capital
The main advantage of trading using opposite Federal Realty and Oakley Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Oakley 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 Oakley Capital will offset losses from the drop in Oakley Capital's long position.| Federal Realty vs. Adriatic Metals | Federal Realty vs. Aeorema Communications Plc | Federal Realty vs. Empire Metals Limited | Federal Realty vs. Gaztransport et Technigaz |
| Oakley Capital vs. Catalyst Media Group | Oakley Capital vs. Oncimmune Holdings plc | Oakley Capital vs. Invesco Health Care | Oakley Capital vs. Coor Service Management |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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