Correlation Between Federal Agricultural and CaliberCos
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and CaliberCos 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 CaliberCos 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 CaliberCos Class A, you can compare the effects of market volatilities on Federal Agricultural and CaliberCos 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 CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and CaliberCos.
Diversification Opportunities for Federal Agricultural and CaliberCos
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and CaliberCos is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A 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 CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and CaliberCos go up and down completely randomly.
Pair Corralation between Federal Agricultural and CaliberCos
Considering the 90-day investment horizon Federal Agricultural Mortgage is expected to generate 0.15 times more return on investment than CaliberCos. However, Federal Agricultural Mortgage is 6.73 times less risky than CaliberCos. It trades about 0.08 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.08 per unit of risk. If you would invest 21,211 in Federal Agricultural Mortgage on September 13, 2024 and sell it today you would earn a total of 434.00 from holding Federal Agricultural Mortgage or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. CaliberCos Class A
Performance |
| Timeline |
| Federal Agricultural |
| CaliberCos Class A |
Federal Agricultural and CaliberCos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and CaliberCos
The main advantage of trading using opposite Federal Agricultural and CaliberCos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, CaliberCos 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 CaliberCos will offset losses from the drop in CaliberCos' long position.The idea behind Federal Agricultural Mortgage and CaliberCos Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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