Correlation Between Confluent and Federal Natl
Can any of the company-specific risk be diversified away by investing in both Confluent and Federal Natl 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 Confluent and Federal Natl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Confluent and Federal Natl Mtg, you can compare the effects of market volatilities on Confluent and Federal Natl 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 Confluent with a short position of Federal Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Confluent and Federal Natl.
Diversification Opportunities for Confluent and Federal Natl
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Confluent and Federal is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Federal Natl Mtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Natl Mtg and Confluent 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 Confluent are associated (or correlated) with Federal Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Natl Mtg has no effect on the direction of Confluent i.e., Confluent and Federal Natl go up and down completely randomly.
Pair Corralation between Confluent and Federal Natl
Given the investment horizon of 90 days Confluent is expected to generate 5.28 times less return on investment than Federal Natl. But when comparing it to its historical volatility, Confluent is 4.97 times less risky than Federal Natl. It trades about 0.29 of its potential returns per unit of risk. Federal Natl Mtg is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 375.00 in Federal Natl Mtg on September 1, 2024 and sell it today you would earn a total of 480.00 from holding Federal Natl Mtg or generate 128.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Confluent vs. Federal Natl Mtg
Performance |
| Timeline |
| Confluent |
| Federal Natl Mtg |
Confluent and Federal Natl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Confluent and Federal Natl
The main advantage of trading using opposite Confluent and Federal Natl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent position performs unexpectedly, Federal Natl 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 Natl will offset losses from the drop in Federal Natl's long position.| Confluent vs. DigitalOcean Holdings | Confluent vs. Doximity | Confluent vs. Gitlab Inc | Confluent vs. Global E Online |
| Federal Natl vs. Federal National Mortgage | Federal Natl vs. Federal Home Loan | Federal Natl vs. Federal National Mortgage | Federal Natl vs. Federal National Mortgage |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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