Correlation Between Freedom Bank and Zedge
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Zedge 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 Zedge 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 Zedge Inc, you can compare the effects of market volatilities on Freedom Bank and Zedge 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 Zedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Zedge.
Diversification Opportunities for Freedom Bank and Zedge
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freedom and Zedge is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Freedom Bank i.e., Freedom Bank and Zedge go up and down completely randomly.
Pair Corralation between Freedom Bank and Zedge
Given the investment horizon of 90 days Freedom Bank of is expected to generate 0.21 times more return on investment than Zedge. However, Freedom Bank of is 4.66 times less risky than Zedge. It trades about -0.04 of its potential returns per unit of risk. Zedge Inc is currently generating about -0.18 per unit of risk. If you would invest 1,077 in Freedom Bank of on September 3, 2024 and sell it today you would lose (16.00) from holding Freedom Bank of or give up 1.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Bank of vs. Zedge Inc
Performance |
| Timeline |
| Freedom Bank |
| Zedge Inc |
Freedom Bank and Zedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Zedge
The main advantage of trading using opposite Freedom Bank and Zedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Zedge 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 Zedge will offset losses from the drop in Zedge's long position.| Freedom Bank vs. Western Asset Global | Freedom Bank vs. Invesco Trust For | Freedom Bank vs. Logan Ridge Finance | Freedom Bank vs. Invesco Advantage MIT |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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