Correlation Between Federal Agricultural and INPOST SA
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and INPOST SA 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 INPOST SA 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 INPOST SA EO, you can compare the effects of market volatilities on Federal Agricultural and INPOST SA 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 INPOST SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and INPOST SA.
Diversification Opportunities for Federal Agricultural and INPOST SA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and INPOST is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and INPOST SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPOST SA EO 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 INPOST SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPOST SA EO has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and INPOST SA go up and down completely randomly.
Pair Corralation between Federal Agricultural and INPOST SA
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 1.44 times more return on investment than INPOST SA. However, Federal Agricultural is 1.44 times more volatile than INPOST SA EO. It trades about 0.09 of its potential returns per unit of risk. INPOST SA EO is currently generating about -0.16 per unit of risk. If you would invest 16,882 in Federal Agricultural Mortgage on October 26, 2024 and sell it today you would earn a total of 1,818 from holding Federal Agricultural Mortgage or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. INPOST SA EO
Performance |
| Timeline |
| Federal Agricultural |
| INPOST SA EO |
Federal Agricultural and INPOST SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and INPOST SA
The main advantage of trading using opposite Federal Agricultural and INPOST SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, INPOST SA 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 INPOST SA will offset losses from the drop in INPOST SA's long position.| Federal Agricultural vs. Direct Line Insurance | Federal Agricultural vs. QBE Insurance Group | Federal Agricultural vs. VIENNA INSURANCE GR | Federal Agricultural vs. Safety Insurance Group |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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