Correlation Between Federal Agricultural and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Columbia Sportswear 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 Columbia Sportswear 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 Columbia Sportswear, you can compare the effects of market volatilities on Federal Agricultural and Columbia Sportswear 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 Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Columbia Sportswear.
Diversification Opportunities for Federal Agricultural and Columbia Sportswear
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federal and Columbia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Columbia Sportswear go up and down completely randomly.
Pair Corralation between Federal Agricultural and Columbia Sportswear
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 1.21 times more return on investment than Columbia Sportswear. However, Federal Agricultural is 1.21 times more volatile than Columbia Sportswear. It trades about 0.06 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.04 per unit of risk. If you would invest 12,124 in Federal Agricultural Mortgage on October 16, 2024 and sell it today you would earn a total of 5,976 from holding Federal Agricultural Mortgage or generate 49.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Columbia Sportswear
Performance |
| Timeline |
| Federal Agricultural |
| Columbia Sportswear |
Federal Agricultural and Columbia Sportswear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Columbia Sportswear
The main advantage of trading using opposite Federal Agricultural and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear's long position.| Federal Agricultural vs. Marie Brizard Wine | Federal Agricultural vs. Laureate Education | Federal Agricultural vs. Strategic Education | Federal Agricultural vs. CHINA EDUCATION GROUP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |