Correlation Between Federal Home and IDEXX Laboratories
Can any of the company-specific risk be diversified away by investing in both Federal Home and IDEXX Laboratories 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 Federal Home and IDEXX Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home Loan and IDEXX Laboratories, you can compare the effects of market volatilities on Federal Home and IDEXX Laboratories 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 Federal Home with a short position of IDEXX Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and IDEXX Laboratories.
Diversification Opportunities for Federal Home and IDEXX Laboratories
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federal and IDEXX is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and IDEXX Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEXX Laboratories and Federal Home 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 Federal Home Loan are associated (or correlated) with IDEXX Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEXX Laboratories has no effect on the direction of Federal Home i.e., Federal Home and IDEXX Laboratories go up and down completely randomly.
Pair Corralation between Federal Home and IDEXX Laboratories
Assuming the 90 days horizon Federal Home Loan is expected to generate 4.89 times more return on investment than IDEXX Laboratories. However, Federal Home is 4.89 times more volatile than IDEXX Laboratories. It trades about 0.4 of its potential returns per unit of risk. IDEXX Laboratories is currently generating about -0.13 per unit of risk. If you would invest 131.00 in Federal Home Loan on August 25, 2024 and sell it today you would earn a total of 163.00 from holding Federal Home Loan or generate 124.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. IDEXX Laboratories
Performance |
| Timeline |
| Federal Home Loan |
| IDEXX Laboratories |
Federal Home and IDEXX Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and IDEXX Laboratories
The main advantage of trading using opposite Federal Home and IDEXX Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, IDEXX Laboratories 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 IDEXX Laboratories will offset losses from the drop in IDEXX Laboratories' long position.| Federal Home vs. Superior Plus Corp | Federal Home vs. NMI Holdings | Federal Home vs. Origin Agritech | Federal Home vs. SIVERS SEMICONDUCTORS AB |
| IDEXX Laboratories vs. COLUMBIA SPORTSWEAR | IDEXX Laboratories vs. LION ONE METALS | IDEXX Laboratories vs. MCEWEN MINING INC | IDEXX Laboratories vs. Lion One Metals |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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