Correlation Between Federal National and Alvopetro Energy
Can any of the company-specific risk be diversified away by investing in both Federal National and Alvopetro Energy 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 Alvopetro Energy 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 Alvopetro Energy, you can compare the effects of market volatilities on Federal National and Alvopetro Energy 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 Alvopetro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Alvopetro Energy.
Diversification Opportunities for Federal National and Alvopetro Energy
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and Alvopetro is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Alvopetro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvopetro Energy 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 Alvopetro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvopetro Energy has no effect on the direction of Federal National i.e., Federal National and Alvopetro Energy go up and down completely randomly.
Pair Corralation between Federal National and Alvopetro Energy
Assuming the 90 days horizon Federal National Mortgage is expected to generate 15.4 times more return on investment than Alvopetro Energy. However, Federal National is 15.4 times more volatile than Alvopetro Energy. It trades about 0.17 of its potential returns per unit of risk. Alvopetro Energy is currently generating about -0.52 per unit of risk. If you would invest 1,599,500 in Federal National Mortgage on August 29, 2024 and sell it today you would earn a total of 930,500 from holding Federal National Mortgage or generate 58.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Alvopetro Energy
Performance |
| Timeline |
| Federal National Mortgage |
| Alvopetro Energy |
Federal National and Alvopetro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Alvopetro Energy
The main advantage of trading using opposite Federal National and Alvopetro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Alvopetro Energy 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 Alvopetro Energy will offset losses from the drop in Alvopetro Energy's long position.| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
| Alvopetro Energy vs. ADX Energy | Alvopetro Energy vs. Calima Energy Limited | Alvopetro Energy vs. Barrister Energy LLC | Alvopetro Energy vs. AER Energy Resources |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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