Correlation Between Federal Agricultural and Waste Management
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Federal Agricultural and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Waste Management.
Diversification Opportunities for Federal Agricultural and Waste Management
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Waste is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Waste Management go up and down completely randomly.
Pair Corralation between Federal Agricultural and Waste Management
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the Waste Management. In addition to that, Federal Agricultural is 1.33 times more volatile than Waste Management. It trades about -0.41 of its total potential returns per unit of risk. Waste Management is currently generating about 0.1 per unit of volatility. If you would invest 19,822 in Waste Management on October 18, 2024 and sell it today you would earn a total of 343.00 from holding Waste Management or generate 1.73% 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. Waste Management
Performance |
| Timeline |
| Federal Agricultural |
| Waste Management |
Federal Agricultural and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Waste Management
The main advantage of trading using opposite Federal Agricultural and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Federal Agricultural vs. Cardinal Health | Federal Agricultural vs. EPSILON HEALTHCARE LTD | Federal Agricultural vs. CARDINAL HEALTH | Federal Agricultural vs. Acadia Healthcare |
| Waste Management vs. AIR PRODCHEMICALS | Waste Management vs. Sekisui Chemical Co | Waste Management vs. Charter Communications | Waste Management vs. KINGBOARD CHEMICAL |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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