Correlation Between Federal Agricultural and Consumer Portfolio
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Consumer Portfolio 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 Consumer Portfolio 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 Consumer Portfolio Services, you can compare the effects of market volatilities on Federal Agricultural and Consumer Portfolio 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 Consumer Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Consumer Portfolio.
Diversification Opportunities for Federal Agricultural and Consumer Portfolio
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and Consumer is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Consumer Portfolio go up and down completely randomly.
Pair Corralation between Federal Agricultural and Consumer Portfolio
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 57.88 times more return on investment than Consumer Portfolio. However, Federal Agricultural is 57.88 times more volatile than Consumer Portfolio Services. It trades about 0.16 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about 0.07 per unit of risk. If you would invest 13,697 in Federal Agricultural Mortgage on August 29, 2024 and sell it today you would earn a total of 2,303 from holding Federal Agricultural Mortgage or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.57% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Consumer Portfolio Services
Performance |
| Timeline |
| Federal Agricultural |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Consumer Portfolio |
Federal Agricultural and Consumer Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Consumer Portfolio
The main advantage of trading using opposite Federal Agricultural and Consumer Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Consumer Portfolio 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 Consumer Portfolio will offset losses from the drop in Consumer Portfolio's long position.| Federal Agricultural vs. Invesco High Income | Federal Agricultural vs. Blackrock Muniholdings Ny | Federal Agricultural vs. Nuveen California Select | Federal Agricultural vs. MFS Investment Grade |
| Consumer Portfolio vs. Visa Class A | Consumer Portfolio vs. Mastercard | Consumer Portfolio vs. Discover Financial Services |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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