Correlation Between Aristocrat Group and Federal National
Can any of the company-specific risk be diversified away by investing in both Aristocrat Group and Federal National 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 Aristocrat Group and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Group Corp and Federal National Mortgage, you can compare the effects of market volatilities on Aristocrat Group and Federal National 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 Aristocrat Group with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Group and Federal National.
Diversification Opportunities for Aristocrat Group and Federal National
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aristocrat and Federal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Group Corp and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and Aristocrat Group 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 Aristocrat Group Corp are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Aristocrat Group i.e., Aristocrat Group and Federal National go up and down completely randomly.
Pair Corralation between Aristocrat Group and Federal National
Given the investment horizon of 90 days Aristocrat Group Corp is expected to generate 10.4 times more return on investment than Federal National. However, Aristocrat Group is 10.4 times more volatile than Federal National Mortgage. It trades about 0.09 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.08 per unit of risk. If you would invest 2.10 in Aristocrat Group Corp on September 4, 2024 and sell it today you would lose (1.39) from holding Aristocrat Group Corp or give up 66.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Group Corp vs. Federal National Mortgage
Performance |
| Timeline |
| Aristocrat Group Corp |
| Federal National Mortgage |
Aristocrat Group and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Group and Federal National
The main advantage of trading using opposite Aristocrat Group and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Group position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| Aristocrat Group vs. Federal National Mortgage | Aristocrat Group vs. Shinhan Financial Group | Aristocrat Group vs. Woori Financial Group | Aristocrat Group vs. Grupo Aval |
| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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