Correlation Between Federal Agricultural and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES, you can compare the effects of market volatilities on Federal Agricultural and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and RCM TECHNOLOGIES.
Diversification Opportunities for Federal Agricultural and RCM TECHNOLOGIES
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and RCM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Federal Agricultural and RCM TECHNOLOGIES
Assuming the 90 days horizon Federal Agricultural is expected to generate 1.35 times less return on investment than RCM TECHNOLOGIES. But when comparing it to its historical volatility, Federal Agricultural Mortgage is 1.25 times less risky than RCM TECHNOLOGIES. It trades about 0.11 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,790 in RCM TECHNOLOGIES on August 31, 2024 and sell it today you would earn a total of 350.00 from holding RCM TECHNOLOGIES or generate 19.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| Federal Agricultural |
| RCM TECHNOLOGIES |
Federal Agricultural and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and RCM TECHNOLOGIES
The main advantage of trading using opposite Federal Agricultural and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.| Federal Agricultural vs. Mastercard | Federal Agricultural vs. PayPal Holdings | Federal Agricultural vs. Capital One Financial | Federal Agricultural vs. ORIX Corporation |
| RCM TECHNOLOGIES vs. SIVERS SEMICONDUCTORS AB | RCM TECHNOLOGIES vs. Darden Restaurants | RCM TECHNOLOGIES vs. Reliance Steel Aluminum | RCM TECHNOLOGIES vs. Q2M Managementberatung AG |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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