Correlation Between Federal Corp and USI Corp
Can any of the company-specific risk be diversified away by investing in both Federal Corp and USI Corp 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 Corp and USI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Corp and USI Corp, you can compare the effects of market volatilities on Federal Corp and USI Corp 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 Corp with a short position of USI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Corp and USI Corp.
Diversification Opportunities for Federal Corp and USI Corp
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and USI is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Federal Corp and USI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USI Corp and Federal Corp 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 Corp are associated (or correlated) with USI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USI Corp has no effect on the direction of Federal Corp i.e., Federal Corp and USI Corp go up and down completely randomly.
Pair Corralation between Federal Corp and USI Corp
Assuming the 90 days trading horizon Federal Corp is expected to generate 0.92 times more return on investment than USI Corp. However, Federal Corp is 1.08 times less risky than USI Corp. It trades about 0.01 of its potential returns per unit of risk. USI Corp is currently generating about -0.05 per unit of risk. If you would invest 2,080 in Federal Corp on September 3, 2024 and sell it today you would earn a total of 95.00 from holding Federal Corp or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Federal Corp vs. USI Corp
Performance |
| Timeline |
| Federal Corp |
| USI Corp |
Federal Corp and USI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Corp and USI Corp
The main advantage of trading using opposite Federal Corp and USI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Corp position performs unexpectedly, USI Corp 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 USI Corp will offset losses from the drop in USI Corp's long position.| Federal Corp vs. Tainan Spinning Co | Federal Corp vs. Chia Her Industrial | Federal Corp vs. WiseChip Semiconductor | Federal Corp vs. Novatek Microelectronics Corp |
| USI Corp vs. Asia Polymer Corp | USI Corp vs. Taiwan Styrene Monomer | USI Corp vs. UPC Technology Corp | USI Corp vs. China Petrochemical Development |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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