Correlation Between 1st Federal and Hafnia
Can any of the company-specific risk be diversified away by investing in both 1st Federal and Hafnia 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 1st Federal and Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Federal Savings and Hafnia Limited, you can compare the effects of market volatilities on 1st Federal and Hafnia 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 1st Federal with a short position of Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Federal and Hafnia.
Diversification Opportunities for 1st Federal and Hafnia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 1st and Hafnia is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding 1st Federal Savings and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia Limited and 1st Federal 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 1st Federal Savings are associated (or correlated) with Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of 1st Federal i.e., 1st Federal and Hafnia go up and down completely randomly.
Pair Corralation between 1st Federal and Hafnia
Given the investment horizon of 90 days 1st Federal Savings is expected to generate 0.38 times more return on investment than Hafnia. However, 1st Federal Savings is 2.6 times less risky than Hafnia. It trades about 0.03 of its potential returns per unit of risk. Hafnia Limited is currently generating about -0.1 per unit of risk. If you would invest 960.00 in 1st Federal Savings on November 3, 2024 and sell it today you would earn a total of 5.00 from holding 1st Federal Savings or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Federal Savings vs. Hafnia Limited
Performance |
| Timeline |
| 1st Federal Savings |
| Hafnia Limited |
1st Federal and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Federal and Hafnia
The main advantage of trading using opposite 1st Federal and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Federal position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.| 1st Federal vs. Chester Mining | 1st Federal vs. Playtika Holding Corp | 1st Federal vs. Evolution Gaming Group | 1st Federal vs. Motorsport Gaming Us |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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