Correlation Between Gamma Communications and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Federal Realty 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 Gamma Communications and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications PLC and Federal Realty Investment, you can compare the effects of market volatilities on Gamma Communications and Federal Realty 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 Gamma Communications with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Federal Realty.
Diversification Opportunities for Gamma Communications and Federal Realty
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gamma and Federal is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Gamma Communications 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 Gamma Communications PLC are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Gamma Communications i.e., Gamma Communications and Federal Realty go up and down completely randomly.
Pair Corralation between Gamma Communications and Federal Realty
Assuming the 90 days trading horizon Gamma Communications is expected to generate 1.71 times less return on investment than Federal Realty. In addition to that, Gamma Communications is 1.73 times more volatile than Federal Realty Investment. It trades about 0.05 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about 0.16 per unit of volatility. If you would invest 9,636 in Federal Realty Investment on August 25, 2024 and sell it today you would earn a total of 1,848 from holding Federal Realty Investment or generate 19.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Gamma Communications PLC vs. Federal Realty Investment
Performance |
| Timeline |
| Gamma Communications PLC |
| Federal Realty Investment |
Gamma Communications and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Federal Realty
The main advantage of trading using opposite Gamma Communications and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Federal Realty 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| Gamma Communications vs. Naked Wines plc | Gamma Communications vs. Zoom Video Communications | Gamma Communications vs. Smithson Investment Trust | Gamma Communications vs. Universal Music Group |
| Federal Realty vs. Monster Beverage Corp | Federal Realty vs. Cizzle Biotechnology Holdings | Federal Realty vs. Ebro Foods | Federal Realty vs. CleanTech Lithium plc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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