Correlation Between Enter Air and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Enter Air and Federal Agricultural 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 Enter Air and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enter Air SA and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Enter Air and Federal Agricultural 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 Enter Air with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enter Air and Federal Agricultural.
Diversification Opportunities for Enter Air and Federal Agricultural
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enter and Federal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Enter Air 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 Enter Air SA are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Enter Air i.e., Enter Air and Federal Agricultural go up and down completely randomly.
Pair Corralation between Enter Air and Federal Agricultural
Assuming the 90 days trading horizon Enter Air SA is expected to generate 1.65 times more return on investment than Federal Agricultural. However, Enter Air is 1.65 times more volatile than Federal Agricultural Mortgage. It trades about 0.09 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.08 per unit of risk. If you would invest 303.00 in Enter Air SA on September 12, 2024 and sell it today you would earn a total of 935.00 from holding Enter Air SA or generate 308.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enter Air SA vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Enter Air SA |
| Federal Agricultural |
Enter Air and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enter Air and Federal Agricultural
The main advantage of trading using opposite Enter Air and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enter Air position performs unexpectedly, Federal Agricultural 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 Agricultural will offset losses from the drop in Federal Agricultural's long position.The idea behind Enter Air SA and Federal Agricultural Mortgage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Federal Agricultural vs. Fair Isaac Corp | Federal Agricultural vs. Enter Air SA | Federal Agricultural vs. Ryanair Holdings plc | Federal Agricultural vs. Wizz Air Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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