Correlation Between Federal Home and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Federal Home and AstraZeneca PLC 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 AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on Federal Home and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and AstraZeneca PLC.
Diversification Opportunities for Federal Home and AstraZeneca PLC
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federal and AstraZeneca is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Federal Home i.e., Federal Home and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Federal Home and AstraZeneca PLC
Assuming the 90 days horizon Federal Home Loan is expected to generate 4.56 times more return on investment than AstraZeneca PLC. However, Federal Home is 4.56 times more volatile than AstraZeneca PLC. It trades about 0.1 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.01 per unit of risk. If you would invest 37.00 in Federal Home Loan on August 30, 2024 and sell it today you would earn a total of 287.00 from holding Federal Home Loan or generate 775.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home Loan vs. AstraZeneca PLC
Performance |
| Timeline |
| Federal Home Loan |
| AstraZeneca PLC |
Federal Home and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and AstraZeneca PLC
The main advantage of trading using opposite Federal Home and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Federal Home vs. Superior Plus Corp | Federal Home vs. NMI Holdings | Federal Home vs. SIVERS SEMICONDUCTORS AB | Federal Home vs. Talanx AG |
| AstraZeneca PLC vs. Johnson Johnson | AstraZeneca PLC vs. Pfizer Inc | AstraZeneca PLC vs. Amgen Inc | AstraZeneca PLC vs. General Mills |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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