Correlation Between Aberforth Smaller and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Aberforth Smaller and Federal Realty 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 Aberforth Smaller and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberforth Smaller Companies and Federal Realty Investment, you can compare the effects of market volatilities on Aberforth Smaller and Federal Realty 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 Aberforth Smaller with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberforth Smaller and Federal Realty.
Diversification Opportunities for Aberforth Smaller and Federal Realty
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aberforth and Federal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Aberforth Smaller 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 Aberforth Smaller Companies are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Aberforth Smaller i.e., Aberforth Smaller and Federal Realty go up and down completely randomly.
Pair Corralation between Aberforth Smaller and Federal Realty
Assuming the 90 days trading horizon Aberforth Smaller is expected to generate 1.75 times less return on investment than Federal Realty. But when comparing it to its historical volatility, Aberforth Smaller Companies is 1.26 times less risky than Federal Realty. It trades about 0.05 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,597 in Federal Realty Investment on August 27, 2024 and sell it today you would earn a total of 2,887 from holding Federal Realty Investment or generate 33.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.76% |
| Values | Daily Returns |
Aberforth Smaller Companies vs. Federal Realty Investment
Performance |
| Timeline |
| Aberforth Smaller |
| Federal Realty Investment |
Aberforth Smaller and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberforth Smaller and Federal Realty
The main advantage of trading using opposite Aberforth Smaller and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberforth Smaller position performs unexpectedly, Federal Realty 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 Realty will offset losses from the drop in Federal Realty's long position.| Aberforth Smaller vs. Federal Realty Investment | Aberforth Smaller vs. Aberdeen Diversified Income | Aberforth Smaller vs. Induction Healthcare Group | Aberforth Smaller vs. New Residential Investment |
| Federal Realty vs. Adriatic Metals | Federal Realty vs. Aeorema Communications Plc | Federal Realty vs. Empire Metals Limited | Federal Realty vs. Gaztransport et Technigaz |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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