Correlation Between Federal Agricultural and Playmates Toys
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Playmates Toys 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 Agricultural and Playmates Toys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Playmates Toys Limited, you can compare the effects of market volatilities on Federal Agricultural and Playmates Toys 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 Agricultural with a short position of Playmates Toys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Playmates Toys.
Diversification Opportunities for Federal Agricultural and Playmates Toys
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federal and Playmates is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Playmates Toys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playmates Toys and Federal Agricultural 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 Agricultural Mortgage are associated (or correlated) with Playmates Toys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playmates Toys has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Playmates Toys go up and down completely randomly.
Pair Corralation between Federal Agricultural and Playmates Toys
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the Playmates Toys. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 8.81 times less risky than Playmates Toys. The stock trades about -0.04 of its potential returns per unit of risk. The Playmates Toys Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6.60 in Playmates Toys Limited on October 30, 2024 and sell it today you would lose (0.10) from holding Playmates Toys Limited or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Playmates Toys Limited
Performance |
| Timeline |
| Federal Agricultural |
| Playmates Toys |
Federal Agricultural and Playmates Toys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Playmates Toys
The main advantage of trading using opposite Federal Agricultural and Playmates Toys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Playmates Toys 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 Playmates Toys will offset losses from the drop in Playmates Toys' long position.| Federal Agricultural vs. Aluminum of | Federal Agricultural vs. SOUTHWEST AIRLINES | Federal Agricultural vs. Southwest Airlines Co | Federal Agricultural vs. Jacquet Metal Service |
| Playmates Toys vs. Booking Holdings | Playmates Toys vs. Oriental Land Co | Playmates Toys vs. ANTA Sports Products | Playmates Toys vs. Li Ning Company |
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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