Correlation Between Federal National and Groupon
Can any of the company-specific risk be diversified away by investing in both Federal National and Groupon 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 National and Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal National Mortgage and Groupon, you can compare the effects of market volatilities on Federal National and Groupon 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 National with a short position of Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Groupon.
Diversification Opportunities for Federal National and Groupon
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Groupon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Federal National 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 National Mortgage are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Federal National i.e., Federal National and Groupon go up and down completely randomly.
Pair Corralation between Federal National and Groupon
Assuming the 90 days horizon Federal National Mortgage is expected to generate 2.11 times more return on investment than Groupon. However, Federal National is 2.11 times more volatile than Groupon. It trades about 0.29 of its potential returns per unit of risk. Groupon is currently generating about -0.01 per unit of risk. If you would invest 519.00 in Federal National Mortgage on August 28, 2024 and sell it today you would earn a total of 581.00 from holding Federal National Mortgage or generate 111.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Groupon
Performance |
| Timeline |
| Federal National Mortgage |
| Groupon |
Federal National and Groupon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Groupon
The main advantage of trading using opposite Federal National and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.| Federal National vs. Federal Home Loan | Federal National vs. Federal Hme 655 | Federal National vs. Federal National Mortgage | Federal National vs. Federal National Mortgage |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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