Correlation Between Federal Home and Transurban
Can any of the company-specific risk be diversified away by investing in both Federal Home and Transurban 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 Transurban 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 Transurban Group, you can compare the effects of market volatilities on Federal Home and Transurban 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 Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Transurban.
Diversification Opportunities for Federal Home and Transurban
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federal and Transurban is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Federal Home i.e., Federal Home and Transurban go up and down completely randomly.
Pair Corralation between Federal Home and Transurban
Assuming the 90 days horizon Federal Home Loan is expected to generate 7.71 times more return on investment than Transurban. However, Federal Home is 7.71 times more volatile than Transurban Group. It trades about 0.41 of its potential returns per unit of risk. Transurban Group is currently generating about 0.07 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 | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federal Home Loan vs. Transurban Group
Performance |
| Timeline |
| Federal Home Loan |
| Transurban Group |
Federal Home and Transurban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Transurban
The main advantage of trading using opposite Federal Home and Transurban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, Transurban 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 Transurban will offset losses from the drop in Transurban'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 |
| Transurban vs. GRUPO CARSO A1 | Transurban vs. EHEALTH | Transurban vs. NORDHEALTH AS NK | Transurban vs. GEAR4MUSIC LS 10 |
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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