Correlation Between Federal National and Mineral Resources
Can any of the company-specific risk be diversified away by investing in both Federal National and Mineral Resources 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 Mineral Resources 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 Mineral Resources Limited, you can compare the effects of market volatilities on Federal National and Mineral Resources 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 Mineral Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Mineral Resources.
Diversification Opportunities for Federal National and Mineral Resources
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Mineral is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Federal National i.e., Federal National and Mineral Resources go up and down completely randomly.
Pair Corralation between Federal National and Mineral Resources
Assuming the 90 days horizon Federal National Mortgage is expected to generate 2.0 times more return on investment than Mineral Resources. However, Federal National is 2.0 times more volatile than Mineral Resources Limited. It trades about 0.09 of its potential returns per unit of risk. Mineral Resources Limited is currently generating about -0.09 per unit of risk. If you would invest 1,500,000 in Federal National Mortgage on August 29, 2024 and sell it today you would earn a total of 1,610,000 from holding Federal National Mortgage or generate 107.33% 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. Mineral Resources Limited
Performance |
| Timeline |
| Federal National Mortgage |
| Mineral Resources |
Federal National and Mineral Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Mineral Resources
The main advantage of trading using opposite Federal National and Mineral Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Mineral Resources 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 Mineral Resources will offset losses from the drop in Mineral Resources' 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 |
| Mineral Resources vs. IGO Limited | Mineral Resources vs. Qubec Nickel Corp | Mineral Resources vs. Nickel Mines Limited | Mineral Resources vs. Surge Copper Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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