Correlation Between Federal National and Via Renewables
Can any of the company-specific risk be diversified away by investing in both Federal National and Via Renewables 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 Via Renewables 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 Via Renewables, you can compare the effects of market volatilities on Federal National and Via Renewables 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 Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Via Renewables.
Diversification Opportunities for Federal National and Via Renewables
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Via is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Federal National i.e., Federal National and Via Renewables go up and down completely randomly.
Pair Corralation between Federal National and Via Renewables
Assuming the 90 days horizon Federal National Mortgage is expected to generate 11.97 times more return on investment than Via Renewables. However, Federal National is 11.97 times more volatile than Via Renewables. It trades about 0.14 of its potential returns per unit of risk. Via Renewables is currently generating about 0.08 per unit of risk. If you would invest 1,420,000 in Federal National Mortgage on September 3, 2024 and sell it today you would earn a total of 1,880,000 from holding Federal National Mortgage or generate 132.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal National Mortgage vs. Via Renewables
Performance |
| Timeline |
| Federal National Mortgage |
| Via Renewables |
Federal National and Via Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Via Renewables
The main advantage of trading using opposite Federal National and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Via Renewables 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 Via Renewables will offset losses from the drop in Via Renewables' 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 |
| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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