Correlation Between Federal Agricultural and Corsair Gaming
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Corsair Gaming 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 Corsair Gaming 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 Corsair Gaming, you can compare the effects of market volatilities on Federal Agricultural and Corsair Gaming 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 Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Corsair Gaming.
Diversification Opportunities for Federal Agricultural and Corsair Gaming
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Corsair is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Corsair Gaming go up and down completely randomly.
Pair Corralation between Federal Agricultural and Corsair Gaming
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the Corsair Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 2.51 times less risky than Corsair Gaming. The stock trades about -0.33 of its potential returns per unit of risk. The Corsair Gaming is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 707.00 in Corsair Gaming on October 10, 2024 and sell it today you would lose (29.00) from holding Corsair Gaming or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Corsair Gaming
Performance |
| Timeline |
| Federal Agricultural |
| Corsair Gaming |
Federal Agricultural and Corsair Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Corsair Gaming
The main advantage of trading using opposite Federal Agricultural and Corsair Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Corsair Gaming 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 Corsair Gaming will offset losses from the drop in Corsair Gaming's long position.| Federal Agricultural vs. MCEWEN MINING INC | Federal Agricultural vs. CarsalesCom | Federal Agricultural vs. KENEDIX OFFICE INV | Federal Agricultural vs. GungHo Online Entertainment |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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