Correlation Between Federal Home and Better Home
Can any of the company-specific risk be diversified away by investing in both Federal Home and Better Home 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 Better Home 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 Better Home Finance, you can compare the effects of market volatilities on Federal Home and Better Home 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 Better Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Better Home.
Diversification Opportunities for Federal Home and Better Home
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federal and Better is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Better Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Home Finance 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 Better Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Home Finance has no effect on the direction of Federal Home i.e., Federal Home and Better Home go up and down completely randomly.
Pair Corralation between Federal Home and Better Home
Given the investment horizon of 90 days Federal Home Loan is expected to generate 2.68 times more return on investment than Better Home. However, Federal Home is 2.68 times more volatile than Better Home Finance. It trades about 0.41 of its potential returns per unit of risk. Better Home Finance is currently generating about 0.03 per unit of risk. If you would invest 129.00 in Federal Home Loan on September 1, 2024 and sell it today you would earn a total of 181.00 from holding Federal Home Loan or generate 140.31% 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. Better Home Finance
Performance |
| Timeline |
| Federal Home Loan |
| Better Home Finance |
Federal Home and Better Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Better Home
The main advantage of trading using opposite Federal Home and Better Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, Better Home 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 Better Home will offset losses from the drop in Better Home's long position.| Federal Home vs. Federal National Mortgage | Federal Home vs. Federal National Mortgage | Federal Home vs. American International Group | Federal Home vs. Groupon |
| Better Home vs. Thor Industries | Better Home vs. Mativ Holdings | Better Home vs. PACCAR Inc | Better Home vs. Wabash National |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |