Correlation Between Federal Home and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Federal Home and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on Federal Home and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and NorAm Drilling.
Diversification Opportunities for Federal Home and NorAm Drilling
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and NorAm is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Federal Home i.e., Federal Home and NorAm Drilling go up and down completely randomly.
Pair Corralation between Federal Home and NorAm Drilling
Assuming the 90 days horizon Federal Home Loan is expected to generate 2.13 times more return on investment than NorAm Drilling. However, Federal Home is 2.13 times more volatile than NorAm Drilling AS. It trades about 0.39 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. NorAm Drilling AS
Performance |
| Timeline |
| Federal Home Loan |
| NorAm Drilling AS |
Federal Home and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and NorAm Drilling
The main advantage of trading using opposite Federal Home and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling'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 |
| NorAm Drilling vs. VIRGIN WINES UK | NorAm Drilling vs. Haier Smart Home | NorAm Drilling vs. Neinor Homes SA | NorAm Drilling vs. VIVA WINE GROUP |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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