Correlation Between Freedom Bank and Security Federal
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Security Federal 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 Freedom Bank and Security Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Security Federal, you can compare the effects of market volatilities on Freedom Bank and Security Federal 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 Freedom Bank with a short position of Security Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Security Federal.
Diversification Opportunities for Freedom Bank and Security Federal
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Security is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Security Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Federal and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Security Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Federal has no effect on the direction of Freedom Bank i.e., Freedom Bank and Security Federal go up and down completely randomly.
Pair Corralation between Freedom Bank and Security Federal
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Security Federal. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 1.58 times less risky than Security Federal. The otc stock trades about 0.0 of its potential returns per unit of risk. The Security Federal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,331 in Security Federal on September 12, 2024 and sell it today you would earn a total of 469.00 from holding Security Federal or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.8% |
| Values | Daily Returns |
Freedom Bank of vs. Security Federal
Performance |
| Timeline |
| Freedom Bank |
| Security Federal |
Freedom Bank and Security Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Security Federal
The main advantage of trading using opposite Freedom Bank and Security Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Security Federal 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 Security Federal will offset losses from the drop in Security Federal's long position.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
| Security Federal vs. Freedom Bank of | Security Federal vs. HUMANA INC | Security Federal vs. Barloworld Ltd ADR | Security Federal vs. Morningstar Unconstrained Allocation |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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