Correlation Between Federal Agricultural and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Federal Agricultural and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and SCOTT TECHNOLOGY.
Diversification Opportunities for Federal Agricultural and SCOTT TECHNOLOGY
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and SCOTT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between Federal Agricultural and SCOTT TECHNOLOGY
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 0.71 times more return on investment than SCOTT TECHNOLOGY. However, Federal Agricultural Mortgage is 1.4 times less risky than SCOTT TECHNOLOGY. It trades about 0.06 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.0 per unit of risk. If you would invest 10,412 in Federal Agricultural Mortgage on October 11, 2024 and sell it today you would earn a total of 7,888 from holding Federal Agricultural Mortgage or generate 75.76% 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. SCOTT TECHNOLOGY
Performance |
| Timeline |
| Federal Agricultural |
| SCOTT TECHNOLOGY |
Federal Agricultural and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and SCOTT TECHNOLOGY
The main advantage of trading using opposite Federal Agricultural and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| Federal Agricultural vs. China Eastern Airlines | Federal Agricultural vs. AEGEAN AIRLINES | Federal Agricultural vs. ADRIATIC METALS LS 013355 | Federal Agricultural vs. SINGAPORE AIRLINES |
| SCOTT TECHNOLOGY vs. Lifeway Foods | SCOTT TECHNOLOGY vs. Sekisui Chemical Co | SCOTT TECHNOLOGY vs. SILICON LABORATOR | SCOTT TECHNOLOGY vs. PREMIER FOODS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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