Correlation Between Federal National and Crestwood Equity
Can any of the company-specific risk be diversified away by investing in both Federal National and Crestwood Equity 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 Crestwood Equity 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 Crestwood Equity Partners, you can compare the effects of market volatilities on Federal National and Crestwood Equity 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 Crestwood Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Crestwood Equity.
Diversification Opportunities for Federal National and Crestwood Equity
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Crestwood is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Crestwood Equity Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crestwood Equity Partners 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 Crestwood Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crestwood Equity Partners has no effect on the direction of Federal National i.e., Federal National and Crestwood Equity go up and down completely randomly.
Pair Corralation between Federal National and Crestwood Equity
If you would invest 1,599,500 in Federal National Mortgage on August 28, 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 Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Federal National Mortgage vs. Crestwood Equity Partners
Performance |
| Timeline |
| Federal National Mortgage |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federal National and Crestwood Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Crestwood Equity
The main advantage of trading using opposite Federal National and Crestwood Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Crestwood Equity 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 Crestwood Equity will offset losses from the drop in Crestwood Equity'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 |
| Crestwood Equity vs. Western Midstream Partners | Crestwood Equity vs. DT Midstream | Crestwood Equity vs. MPLX LP | Crestwood Equity vs. Enterprise Products Partners |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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