Correlation Between Federal Agricultural and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on Federal Agricultural and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for Federal Agricultural and AAC TECHNOLOGHLDGADR
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and AAC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between Federal Agricultural and AAC TECHNOLOGHLDGADR
Assuming the 90 days horizon Federal Agricultural is expected to generate 1.33 times less return on investment than AAC TECHNOLOGHLDGADR. But when comparing it to its historical volatility, Federal Agricultural Mortgage is 1.53 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.06 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 239.00 in AAC TECHNOLOGHLDGADR on October 16, 2024 and sell it today you would earn a total of 193.00 from holding AAC TECHNOLOGHLDGADR or generate 80.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| Federal Agricultural |
| AAC TECHNOLOGHLDGADR |
Federal Agricultural and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite Federal Agricultural and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| Federal Agricultural vs. SIDETRADE EO 1 | Federal Agricultural vs. Indutrade AB | Federal Agricultural vs. SLR Investment Corp | Federal Agricultural vs. Chuangs China Investments |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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