Correlation Between Federal National and SCOR PK
Can any of the company-specific risk be diversified away by investing in both Federal National and SCOR PK 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 SCOR PK 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 SCOR PK, you can compare the effects of market volatilities on Federal National and SCOR PK 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 SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and SCOR PK.
Diversification Opportunities for Federal National and SCOR PK
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and SCOR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK 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 SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Federal National i.e., Federal National and SCOR PK go up and down completely randomly.
Pair Corralation between Federal National and SCOR PK
Assuming the 90 days horizon Federal National Mortgage is expected to generate 2.04 times more return on investment than SCOR PK. However, Federal National is 2.04 times more volatile than SCOR PK. It trades about 0.08 of its potential returns per unit of risk. SCOR PK is currently generating about 0.03 per unit of risk. If you would invest 700,000 in Federal National Mortgage on September 3, 2024 and sell it today you would earn a total of 2,600,000 from holding Federal National Mortgage or generate 371.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Federal National Mortgage vs. SCOR PK
Performance |
| Timeline |
| Federal National Mortgage |
| SCOR PK |
Federal National and SCOR PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and SCOR PK
The main advantage of trading using opposite Federal National and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, SCOR PK 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 SCOR PK will offset losses from the drop in SCOR PK'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 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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