Correlation Between Indian Oil and Federal Bank
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By analyzing existing cross correlation between Indian Oil and The Federal Bank, you can compare the effects of market volatilities on Indian Oil and Federal Bank 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 Indian Oil with a short position of Federal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Federal Bank.
Diversification Opportunities for Indian Oil and Federal Bank
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indian and Federal is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and The Federal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Bank and Indian Oil 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 Indian Oil are associated (or correlated) with Federal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Bank has no effect on the direction of Indian Oil i.e., Indian Oil and Federal Bank go up and down completely randomly.
Pair Corralation between Indian Oil and Federal Bank
Assuming the 90 days trading horizon Indian Oil is expected to generate 1.39 times more return on investment than Federal Bank. However, Indian Oil is 1.39 times more volatile than The Federal Bank. It trades about 0.08 of its potential returns per unit of risk. The Federal Bank is currently generating about 0.1 per unit of risk. If you would invest 8,411 in Indian Oil on September 12, 2024 and sell it today you would earn a total of 5,943 from holding Indian Oil or generate 70.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Oil vs. The Federal Bank
Performance |
| Timeline |
| Indian Oil |
| Federal Bank |
Indian Oil and Federal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Oil and Federal Bank
The main advantage of trading using opposite Indian Oil and Federal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil position performs unexpectedly, Federal Bank 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 Bank will offset losses from the drop in Federal Bank's long position.| Indian Oil vs. Computer Age Management | Indian Oil vs. Tata Chemicals Limited | Indian Oil vs. Gujarat Fluorochemicals Limited | Indian Oil vs. Dharani SugarsChemicals Limited |
| Federal Bank vs. Yes Bank Limited | Federal Bank vs. Indian Oil | Federal Bank vs. Indo Borax Chemicals | Federal Bank vs. Kingfa Science Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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