Correlation Between Caffyns PLC and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Caffyns PLC 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 Caffyns PLC and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caffyns PLC and Federal Realty Investment, you can compare the effects of market volatilities on Caffyns PLC 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 Caffyns PLC with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caffyns PLC and Federal Realty.
Diversification Opportunities for Caffyns PLC and Federal Realty
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caffyns and Federal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Caffyns PLC 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 Caffyns PLC 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 Caffyns PLC 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 Caffyns PLC i.e., Caffyns PLC and Federal Realty go up and down completely randomly.
Pair Corralation between Caffyns PLC and Federal Realty
Assuming the 90 days trading horizon Caffyns PLC is expected to under-perform the Federal Realty. In addition to that, Caffyns PLC is 1.26 times more volatile than Federal Realty Investment. It trades about -0.21 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about 0.17 per unit of volatility. If you would invest 11,343 in Federal Realty Investment on August 29, 2024 and sell it today you would earn a total of 413.00 from holding Federal Realty Investment or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caffyns PLC vs. Federal Realty Investment
Performance |
| Timeline |
| Caffyns PLC |
| Federal Realty Investment |
Caffyns PLC and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caffyns PLC and Federal Realty
The main advantage of trading using opposite Caffyns PLC and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caffyns PLC 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.| Caffyns PLC vs. Hansa Investment | Caffyns PLC vs. Diversified Energy | Caffyns PLC vs. Evolution Gaming Group | Caffyns PLC vs. Federal Realty Investment |
| Federal Realty vs. Lendinvest PLC | Federal Realty vs. Neometals | Federal Realty vs. Coor Service Management | Federal Realty vs. Albion Technology General |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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