Correlation Between H FARM and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both H FARM 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 H FARM and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H FARM SPA and Federal Agricultural Mortgage, you can compare the effects of market volatilities on H FARM 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 H FARM with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and Federal Agricultural.
Diversification Opportunities for H FARM and Federal Agricultural
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 5JQ and Federal is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and H FARM 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 H FARM SPA 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 H FARM i.e., H FARM and Federal Agricultural go up and down completely randomly.
Pair Corralation between H FARM and Federal Agricultural
Assuming the 90 days horizon H FARM SPA is expected to under-perform the Federal Agricultural. In addition to that, H FARM is 1.31 times more volatile than Federal Agricultural Mortgage. It trades about -0.29 of its total potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.22 per unit of volatility. If you would invest 17,000 in Federal Agricultural Mortgage on August 29, 2024 and sell it today you would earn a total of 2,600 from holding Federal Agricultural Mortgage or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
H FARM SPA vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| H FARM SPA |
| Federal Agricultural |
H FARM and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H FARM and Federal Agricultural
The main advantage of trading using opposite H FARM and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM 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.| H FARM vs. Rayonier Advanced Materials | H FARM vs. NEWELL RUBBERMAID | H FARM vs. BE Semiconductor Industries | H FARM vs. ON SEMICONDUCTOR |
| Federal Agricultural vs. Visa Inc | Federal Agricultural vs. Visa Inc | Federal Agricultural vs. Mastercard | Federal Agricultural vs. Mastercard |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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