Correlation Between Federal Home and LEWAG HOLDING
Can any of the company-specific risk be diversified away by investing in both Federal Home and LEWAG HOLDING 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 LEWAG HOLDING 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 LEWAG HOLDING AG, you can compare the effects of market volatilities on Federal Home and LEWAG HOLDING 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 LEWAG HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and LEWAG HOLDING.
Diversification Opportunities for Federal Home and LEWAG HOLDING
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and LEWAG is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and LEWAG HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEWAG HOLDING AG 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 LEWAG HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEWAG HOLDING AG has no effect on the direction of Federal Home i.e., Federal Home and LEWAG HOLDING go up and down completely randomly.
Pair Corralation between Federal Home and LEWAG HOLDING
Assuming the 90 days horizon Federal Home Loan is expected to generate 3.7 times more return on investment than LEWAG HOLDING. However, Federal Home is 3.7 times more volatile than LEWAG HOLDING AG. It trades about 0.45 of its potential returns per unit of risk. LEWAG HOLDING AG is currently generating about -0.11 per unit of risk. If you would invest 120.00 in Federal Home Loan on August 31, 2024 and sell it today you would earn a total of 172.00 from holding Federal Home Loan or generate 143.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. LEWAG HOLDING AG
Performance |
| Timeline |
| Federal Home Loan |
| LEWAG HOLDING AG |
Federal Home and LEWAG HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and LEWAG HOLDING
The main advantage of trading using opposite Federal Home and LEWAG HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, LEWAG HOLDING 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 LEWAG HOLDING will offset losses from the drop in LEWAG HOLDING's long position.| Federal Home vs. DIVERSIFIED ROYALTY | Federal Home vs. Superior Plus Corp | Federal Home vs. NMI Holdings | Federal Home vs. Origin Agritech |
| LEWAG HOLDING vs. Compugroup Medical SE | LEWAG HOLDING vs. Magic Software Enterprises | LEWAG HOLDING vs. FORMPIPE SOFTWARE AB | LEWAG HOLDING vs. Check Point Software |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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