Correlation Between Federal Agricultural and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Park Hotels 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 Park Hotels 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 Park Hotels Resorts, you can compare the effects of market volatilities on Federal Agricultural and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Park Hotels.
Diversification Opportunities for Federal Agricultural and Park Hotels
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federal and Park is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Park Hotels go up and down completely randomly.
Pair Corralation between Federal Agricultural and Park Hotels
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 1.0 times more return on investment than Park Hotels. However, Federal Agricultural Mortgage is 1.0 times less risky than Park Hotels. It trades about 0.07 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.03 per unit of risk. If you would invest 16,247 in Federal Agricultural Mortgage on September 23, 2024 and sell it today you would earn a total of 2,853 from holding Federal Agricultural Mortgage or generate 17.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Park Hotels Resorts
Performance |
| Timeline |
| Federal Agricultural |
| Park Hotels Resorts |
Federal Agricultural and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Park Hotels
The main advantage of trading using opposite Federal Agricultural and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Federal Agricultural vs. Evolution Mining Limited | Federal Agricultural vs. GRIFFIN MINING LTD | Federal Agricultural vs. RELIANCE STEEL AL | Federal Agricultural vs. PKSHA TECHNOLOGY INC |
| Park Hotels vs. Federal Agricultural Mortgage | Park Hotels vs. Siamgas And Petrochemicals | Park Hotels vs. ScanSource | Park Hotels vs. Sumitomo Mitsui Construction |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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