Correlation Between Federal National and Archer Materials
Can any of the company-specific risk be diversified away by investing in both Federal National and Archer Materials 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 Archer Materials 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 Archer Materials Limited, you can compare the effects of market volatilities on Federal National and Archer Materials 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 Archer Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Archer Materials.
Diversification Opportunities for Federal National and Archer Materials
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and Archer is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Archer Materials Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Materials 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 Archer Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Materials has no effect on the direction of Federal National i.e., Federal National and Archer Materials go up and down completely randomly.
Pair Corralation between Federal National and Archer Materials
Assuming the 90 days horizon Federal National Mortgage is expected to generate 0.29 times more return on investment than Archer Materials. However, Federal National Mortgage is 3.5 times less risky than Archer Materials. It trades about 0.01 of its potential returns per unit of risk. Archer Materials Limited is currently generating about -0.21 per unit of risk. If you would invest 3,800,000 in Federal National Mortgage on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Federal National Mortgage or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Archer Materials Limited
Performance |
| Timeline |
| Federal National Mortgage |
| Archer Materials |
Federal National and Archer Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Archer Materials
The main advantage of trading using opposite Federal National and Archer Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Archer Materials 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 Archer Materials will offset losses from the drop in Archer Materials' 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 |
| Archer Materials vs. Aeluma Inc | Archer Materials vs. Alphawave IP Group | Archer Materials vs. BrainChip Holdings | Archer Materials vs. Arteris |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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