Correlation Between Federal Home and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Federal Home and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on Federal Home and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Talanx AG.
Diversification Opportunities for Federal Home and Talanx AG
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federal and Talanx is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Federal Home i.e., Federal Home and Talanx AG go up and down completely randomly.
Pair Corralation between Federal Home and Talanx AG
Assuming the 90 days horizon Federal Home Loan is expected to generate 7.57 times more return on investment than Talanx AG. However, Federal Home is 7.57 times more volatile than Talanx AG. It trades about 0.39 of its potential returns per unit of risk. Talanx AG is currently generating about 0.27 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 151.00 from holding Federal Home Loan or generate 115.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. Talanx AG
Performance |
| Timeline |
| Federal Home Loan |
| Talanx AG |
Federal Home and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Talanx AG
The main advantage of trading using opposite Federal Home and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG'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 |
| Talanx AG vs. Coeur Mining | Talanx AG vs. Harmony Gold Mining | Talanx AG vs. Apollo Investment Corp | Talanx AG vs. WisdomTree Investments |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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