Correlation Between Herald Investment and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Herald Investment 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 Herald Investment and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Federal Realty Investment, you can compare the effects of market volatilities on Herald Investment 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 Herald Investment with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Federal Realty.
Diversification Opportunities for Herald Investment and Federal Realty
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Herald and Federal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust 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 Herald Investment 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 Herald Investment Trust 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 Herald Investment i.e., Herald Investment and Federal Realty go up and down completely randomly.
Pair Corralation between Herald Investment and Federal Realty
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 1.57 times more return on investment than Federal Realty. However, Herald Investment is 1.57 times more volatile than Federal Realty Investment. It trades about 0.49 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.39 per unit of risk. If you would invest 208,000 in Herald Investment Trust on September 2, 2024 and sell it today you would earn a total of 27,500 from holding Herald Investment Trust or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Herald Investment Trust vs. Federal Realty Investment
Performance |
| Timeline |
| Herald Investment Trust |
| Federal Realty Investment |
Herald Investment and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Federal Realty
The main advantage of trading using opposite Herald Investment and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment 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.| Herald Investment vs. Zoom Video Communications | Herald Investment vs. Home Depot | Herald Investment vs. Tyson Foods Cl | Herald Investment vs. Spirent Communications plc |
| Federal Realty vs. Uniper SE | Federal Realty vs. Mulberry Group PLC | Federal Realty vs. London Security Plc | Federal Realty vs. Triad Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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