Correlation Between Federal Agricultural and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES, you can compare the effects of market volatilities on Federal Agricultural and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and SINGAPORE AIRLINES.
Diversification Opportunities for Federal Agricultural and SINGAPORE AIRLINES
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federal and SINGAPORE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between Federal Agricultural and SINGAPORE AIRLINES
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 1.74 times more return on investment than SINGAPORE AIRLINES. However, Federal Agricultural is 1.74 times more volatile than SINGAPORE AIRLINES. It trades about 0.05 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.04 per unit of risk. If you would invest 11,256 in Federal Agricultural Mortgage on October 18, 2024 and sell it today you would earn a total of 6,644 from holding Federal Agricultural Mortgage or generate 59.03% 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. SINGAPORE AIRLINES
Performance |
| Timeline |
| Federal Agricultural |
| SINGAPORE AIRLINES |
Federal Agricultural and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and SINGAPORE AIRLINES
The main advantage of trading using opposite Federal Agricultural and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES's long position.| Federal Agricultural vs. Cardinal Health | Federal Agricultural vs. EPSILON HEALTHCARE LTD | Federal Agricultural vs. CARDINAL HEALTH | Federal Agricultural vs. Acadia Healthcare |
| SINGAPORE AIRLINES vs. FLOW TRADERS LTD | SINGAPORE AIRLINES vs. The Trade Desk | SINGAPORE AIRLINES vs. ASPEN TECHINC DL | SINGAPORE AIRLINES vs. Treasury Wine Estates |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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