Correlation Between Bank Rakyat and Federal National
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat 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 Bank Rakyat and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Federal National Mortgage, you can compare the effects of market volatilities on Bank Rakyat 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 Bank Rakyat with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Federal National.
Diversification Opportunities for Bank Rakyat and Federal National
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Federal is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat 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 Bank Rakyat 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 Bank Rakyat 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 Bank Rakyat i.e., Bank Rakyat and Federal National go up and down completely randomly.
Pair Corralation between Bank Rakyat and Federal National
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Federal National. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 3.75 times less risky than Federal National. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Federal National Mortgage is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 620,000 in Federal National Mortgage on September 4, 2024 and sell it today you would earn a total of 2,680,000 from holding Federal National Mortgage or generate 432.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Bank Rakyat vs. Federal National Mortgage
Performance |
| Timeline |
| Bank Rakyat |
| Federal National Mortgage |
Bank Rakyat and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Federal National
The main advantage of trading using opposite Bank Rakyat and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat 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.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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