Correlation Between Federal Agricultural and Check Point
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Check Point 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 Check Point 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 Check Point Software, you can compare the effects of market volatilities on Federal Agricultural and Check Point 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 Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Check Point.
Diversification Opportunities for Federal Agricultural and Check Point
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Check is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Check Point go up and down completely randomly.
Pair Corralation between Federal Agricultural and Check Point
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 1.36 times more return on investment than Check Point. However, Federal Agricultural is 1.36 times more volatile than Check Point Software. It trades about 0.07 of its potential returns per unit of risk. Check Point Software is currently generating about 0.08 per unit of risk. If you would invest 11,175 in Federal Agricultural Mortgage on December 4, 2024 and sell it today you would earn a total of 8,825 from holding Federal Agricultural Mortgage or generate 78.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Check Point Software
Performance |
| Timeline |
| Federal Agricultural |
| Check Point Software |
Federal Agricultural and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Check Point
The main advantage of trading using opposite Federal Agricultural and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Federal Agricultural vs. United Microelectronics | Federal Agricultural vs. Samsung Electronics Co | Federal Agricultural vs. Methode Electronics | Federal Agricultural vs. Electronic Arts |
| Check Point vs. Sterling Construction | Check Point vs. SmarTone Telecommunications Holdings | Check Point vs. TITAN MACHINERY | Check Point vs. Cellnex Telecom SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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