Correlation Between Federal Agricultural and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on Federal Agricultural and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Thyssenkrupp.
Diversification Opportunities for Federal Agricultural and Thyssenkrupp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Thyssenkrupp is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Federal Agricultural and Thyssenkrupp
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 0.89 times more return on investment than Thyssenkrupp. However, Federal Agricultural Mortgage is 1.12 times less risky than Thyssenkrupp. It trades about 0.07 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about -0.02 per unit of risk. If you would invest 10,201 in Federal Agricultural Mortgage on September 5, 2024 and sell it today you would earn a total of 9,799 from holding Federal Agricultural Mortgage or generate 96.06% 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. thyssenkrupp AG
Performance |
| Timeline |
| Federal Agricultural |
| thyssenkrupp AG |
Federal Agricultural and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Thyssenkrupp
The main advantage of trading using opposite Federal Agricultural and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Federal Agricultural vs. Visa Inc | Federal Agricultural vs. Visa Inc | Federal Agricultural vs. American Express | Federal Agricultural vs. ORIX Corporation |
| Thyssenkrupp vs. MELIA HOTELS | Thyssenkrupp vs. Luckin Coffee | Thyssenkrupp vs. ITALIAN WINE BRANDS | Thyssenkrupp vs. InterContinental Hotels Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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