Correlation Between NOW and Federal Realty
Can any of the company-specific risk be diversified away by investing in both NOW and Federal Realty 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 NOW and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOW Inc and Federal Realty Investment, you can compare the effects of market volatilities on NOW and Federal Realty 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 NOW with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOW and Federal Realty.
Diversification Opportunities for NOW and Federal Realty
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NOW and Federal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NOW Inc and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and NOW 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 NOW Inc are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of NOW i.e., NOW and Federal Realty go up and down completely randomly.
Pair Corralation between NOW and Federal Realty
Assuming the 90 days trading horizon NOW Inc is expected to generate 3.38 times more return on investment than Federal Realty. However, NOW is 3.38 times more volatile than Federal Realty Investment. It trades about 0.12 of its potential returns per unit of risk. Federal Realty Investment is currently generating about -0.13 per unit of risk. If you would invest 1,500 in NOW Inc on November 29, 2024 and sell it today you would earn a total of 161.00 from holding NOW Inc or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NOW Inc vs. Federal Realty Investment
Performance |
| Timeline |
| NOW Inc |
| Federal Realty Investment |
NOW and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOW and Federal Realty
The main advantage of trading using opposite NOW and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOW position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| NOW vs. Central Asia Metals | NOW vs. Cornish Metals | NOW vs. Gamma Communications PLC | NOW vs. Spirent Communications plc |
| Federal Realty vs. Zurich Insurance Group | Federal Realty vs. Jacquet Metal Service | Federal Realty vs. Home Depot | Federal Realty vs. Cairn Homes PLC |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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