Correlation Between National Bank and Federal Realty
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Federal Realty Investment, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Federal Realty.
Diversification Opportunities for National Bank and Federal Realty
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Federal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of 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 National Bank 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 National Bank of 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 National Bank i.e., National Bank and Federal Realty go up and down completely randomly.
Pair Corralation between National Bank and Federal Realty
Assuming the 90 days trading horizon National Bank is expected to generate 1.2 times less return on investment than Federal Realty. In addition to that, National Bank is 1.06 times more volatile than Federal Realty Investment. It trades about 0.03 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about 0.03 per unit of volatility. If you would invest 9,638 in Federal Realty Investment on September 4, 2024 and sell it today you would earn a total of 1,824 from holding Federal Realty Investment or generate 18.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 93.37% |
| Values | Daily Returns |
National Bank of vs. Federal Realty Investment
Performance |
| Timeline |
| National Bank |
| Federal Realty Investment |
National Bank and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Federal Realty
The main advantage of trading using opposite National Bank and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Batm Advanced Communications | National Bank vs. Aeorema Communications Plc | National Bank vs. Spirent Communications plc | National Bank vs. Lindsell Train Investment |
| Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Hyundai Motor | Federal Realty vs. Toyota Motor Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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