Correlation Between EZCORP and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both EZCORP and Federal Agricultural 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 EZCORP and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EZCORP Inc and Federal Agricultural Mortgage, you can compare the effects of market volatilities on EZCORP and Federal Agricultural 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 EZCORP with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of EZCORP and Federal Agricultural.
Diversification Opportunities for EZCORP and Federal Agricultural
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EZCORP and Federal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding EZCORP Inc and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and EZCORP 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 EZCORP Inc are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of EZCORP i.e., EZCORP and Federal Agricultural go up and down completely randomly.
Pair Corralation between EZCORP and Federal Agricultural
Given the investment horizon of 90 days EZCORP Inc is expected to generate 1.15 times more return on investment than Federal Agricultural. However, EZCORP is 1.15 times more volatile than Federal Agricultural Mortgage. It trades about 0.23 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about -0.19 per unit of risk. If you would invest 1,187 in EZCORP Inc on August 27, 2024 and sell it today you would earn a total of 73.00 from holding EZCORP Inc or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EZCORP Inc vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| EZCORP Inc |
| Federal Agricultural |
EZCORP and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EZCORP and Federal Agricultural
The main advantage of trading using opposite EZCORP and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZCORP position performs unexpectedly, Federal Agricultural 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 Agricultural will offset losses from the drop in Federal Agricultural's long position.The idea behind EZCORP Inc and Federal Agricultural Mortgage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Federal Agricultural vs. Capital One Financial | Federal Agricultural vs. Capital One Financial | Federal Agricultural vs. JPMorgan Chase Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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