Correlation Between Federal National and Terns Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Federal National and Terns Pharmaceuticals 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 Terns Pharmaceuticals 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 Terns Pharmaceuticals, you can compare the effects of market volatilities on Federal National and Terns Pharmaceuticals 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 Terns Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Terns Pharmaceuticals.
Diversification Opportunities for Federal National and Terns Pharmaceuticals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Terns is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Terns Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terns Pharmaceuticals 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 Terns Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terns Pharmaceuticals has no effect on the direction of Federal National i.e., Federal National and Terns Pharmaceuticals go up and down completely randomly.
Pair Corralation between Federal National and Terns Pharmaceuticals
Assuming the 90 days horizon Federal National Mortgage is expected to generate 1.79 times more return on investment than Terns Pharmaceuticals. However, Federal National is 1.79 times more volatile than Terns Pharmaceuticals. It trades about 0.09 of its potential returns per unit of risk. Terns Pharmaceuticals is currently generating about -0.15 per unit of risk. If you would invest 1,600,000 in Federal National Mortgage on January 11, 2025 and sell it today you would earn a total of 2,300,000 from holding Federal National Mortgage or generate 143.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Federal National Mortgage vs. Terns Pharmaceuticals
Performance |
| Timeline |
| Federal National Mortgage |
| Terns Pharmaceuticals |
Federal National and Terns Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Terns Pharmaceuticals
The main advantage of trading using opposite Federal National and Terns Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Terns Pharmaceuticals 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 Terns Pharmaceuticals will offset losses from the drop in Terns Pharmaceuticals' 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 |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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