Correlation Between Federal Agricultural and Esprinet SpA
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Esprinet SpA 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 Esprinet SpA 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 Esprinet SpA, you can compare the effects of market volatilities on Federal Agricultural and Esprinet SpA 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 Esprinet SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Esprinet SpA.
Diversification Opportunities for Federal Agricultural and Esprinet SpA
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federal and Esprinet is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Esprinet SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esprinet SpA 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 Esprinet SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esprinet SpA has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Esprinet SpA go up and down completely randomly.
Pair Corralation between Federal Agricultural and Esprinet SpA
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 0.91 times more return on investment than Esprinet SpA. However, Federal Agricultural Mortgage is 1.1 times less risky than Esprinet SpA. It trades about 0.06 of its potential returns per unit of risk. Esprinet SpA is currently generating about -0.03 per unit of risk. If you would invest 11,819 in Federal Agricultural Mortgage on November 5, 2024 and sell it today you would earn a total of 7,281 from holding Federal Agricultural Mortgage or generate 61.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Esprinet SpA
Performance |
| Timeline |
| Federal Agricultural |
| Esprinet SpA |
Federal Agricultural and Esprinet SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Esprinet SpA
The main advantage of trading using opposite Federal Agricultural and Esprinet SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Esprinet SpA 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 Esprinet SpA will offset losses from the drop in Esprinet SpA's long position.| Federal Agricultural vs. CEOTRONICS | Federal Agricultural vs. Japan Post Insurance | Federal Agricultural vs. Sims Metal Management | Federal Agricultural vs. AIR PRODCHEMICALS |
| Esprinet SpA vs. Grupo Carso SAB | Esprinet SpA vs. GAMING FAC SA | Esprinet SpA vs. Penn National Gaming | Esprinet SpA vs. HOCHSCHILD MINING |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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