Correlation Between Federal Agricultural and Terex
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Terex 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 Terex 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 Terex, you can compare the effects of market volatilities on Federal Agricultural and Terex 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 Terex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Terex.
Diversification Opportunities for Federal Agricultural and Terex
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Terex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Terex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terex 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 Terex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terex has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Terex go up and down completely randomly.
Pair Corralation between Federal Agricultural and Terex
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 0.79 times more return on investment than Terex. However, Federal Agricultural Mortgage is 1.27 times less risky than Terex. It trades about 0.06 of its potential returns per unit of risk. Terex is currently generating about 0.03 per unit of risk. If you would invest 15,200 in Federal Agricultural Mortgage on September 3, 2024 and sell it today you would earn a total of 4,700 from holding Federal Agricultural Mortgage or generate 30.92% 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. Terex
Performance |
| Timeline |
| Federal Agricultural |
| Terex |
Federal Agricultural and Terex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Terex
The main advantage of trading using opposite Federal Agricultural and Terex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Terex 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 Terex will offset losses from the drop in Terex's long position.| Federal Agricultural vs. Visa Inc | Federal Agricultural vs. Visa Inc | Federal Agricultural vs. American Express | Federal Agricultural vs. ORIX Corporation |
| Terex vs. Federal Agricultural Mortgage | Terex vs. Dairy Farm International | Terex vs. DAIRY FARM INTL | Terex vs. Regions Financial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |