Correlation Between Federal National and Spectris Plc
Can any of the company-specific risk be diversified away by investing in both Federal National and Spectris Plc 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 Spectris Plc 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 Spectris plc, you can compare the effects of market volatilities on Federal National and Spectris Plc 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 Spectris Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Spectris Plc.
Diversification Opportunities for Federal National and Spectris Plc
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Spectris is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Spectris plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectris plc 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 Spectris Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectris plc has no effect on the direction of Federal National i.e., Federal National and Spectris Plc go up and down completely randomly.
Pair Corralation between Federal National and Spectris Plc
Assuming the 90 days horizon Federal National Mortgage is expected to generate 6.9 times more return on investment than Spectris Plc. However, Federal National is 6.9 times more volatile than Spectris plc. It trades about 0.17 of its potential returns per unit of risk. Spectris plc is currently generating about -0.08 per unit of risk. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Spectris plc
Performance |
| Timeline |
| Federal National Mortgage |
| Spectris plc |
Federal National and Spectris Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Spectris Plc
The main advantage of trading using opposite Federal National and Spectris Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Spectris Plc 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 Spectris Plc will offset losses from the drop in Spectris Plc'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 |
| Spectris Plc vs. Garmin | Spectris Plc vs. Keysight Technologies | Spectris Plc vs. Fortive Corp | Spectris Plc vs. Teledyne Technologies Incorporated |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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