Correlation Between Federal Agricultural and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings, you can compare the effects of market volatilities on Federal Agricultural and Lexinfintech Holdings 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 Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Lexinfintech Holdings.
Diversification Opportunities for Federal Agricultural and Lexinfintech Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Federal and Lexinfintech is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between Federal Agricultural and Lexinfintech Holdings
Considering the 90-day investment horizon Federal Agricultural Mortgage is expected to generate 0.55 times more return on investment than Lexinfintech Holdings. However, Federal Agricultural Mortgage is 1.8 times less risky than Lexinfintech Holdings. It trades about 0.15 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about 0.05 per unit of risk. If you would invest 18,530 in Federal Agricultural Mortgage on August 24, 2024 and sell it today you would earn a total of 1,647 from holding Federal Agricultural Mortgage or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Lexinfintech Holdings
Performance |
| Timeline |
| Federal Agricultural |
| Lexinfintech Holdings |
Federal Agricultural and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Lexinfintech Holdings
The main advantage of trading using opposite Federal Agricultural and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| Federal Agricultural vs. Visa Class A | Federal Agricultural vs. Mastercard | Federal Agricultural vs. SoFi Technologies | Federal Agricultural vs. Coca Cola Consolidated |
| Lexinfintech Holdings vs. Visa Class A | Lexinfintech Holdings vs. Mastercard | Lexinfintech Holdings vs. SoFi Technologies | Lexinfintech Holdings vs. Coca Cola Consolidated |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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