Correlation Between Federal Home and SUMITOMO P
Can any of the company-specific risk be diversified away by investing in both Federal Home and SUMITOMO P 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 SUMITOMO P 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 SUMITOMO P SP, you can compare the effects of market volatilities on Federal Home and SUMITOMO P 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 SUMITOMO P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and SUMITOMO P.
Diversification Opportunities for Federal Home and SUMITOMO P
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and SUMITOMO is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and SUMITOMO P SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO P SP 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 SUMITOMO P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO P SP has no effect on the direction of Federal Home i.e., Federal Home and SUMITOMO P go up and down completely randomly.
Pair Corralation between Federal Home and SUMITOMO P
Assuming the 90 days horizon Federal Home Loan is expected to generate 5.99 times more return on investment than SUMITOMO P. However, Federal Home is 5.99 times more volatile than SUMITOMO P SP. It trades about 0.41 of its potential returns per unit of risk. SUMITOMO P SP is currently generating about 0.09 per unit of risk. If you would invest 136.00 in Federal Home Loan on August 28, 2024 and sell it today you would earn a total of 158.00 from holding Federal Home Loan or generate 116.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. SUMITOMO P SP
Performance |
| Timeline |
| Federal Home Loan |
| SUMITOMO P SP |
Federal Home and SUMITOMO P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and SUMITOMO P
The main advantage of trading using opposite Federal Home and SUMITOMO P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, SUMITOMO P 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 SUMITOMO P will offset losses from the drop in SUMITOMO P's long position.| Federal Home vs. Superior Plus Corp | Federal Home vs. NMI Holdings | Federal Home vs. Origin Agritech | Federal Home vs. SIVERS SEMICONDUCTORS AB |
| SUMITOMO P vs. Superior Plus Corp | SUMITOMO P vs. NMI Holdings | SUMITOMO P vs. Origin Agritech | SUMITOMO P vs. SIVERS SEMICONDUCTORS AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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