Correlation Between Lemonade and Federal National
Can any of the company-specific risk be diversified away by investing in both Lemonade and Federal National 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 Lemonade and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemonade and Federal National Mortgage, you can compare the effects of market volatilities on Lemonade and Federal National 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 Lemonade with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemonade and Federal National.
Diversification Opportunities for Lemonade and Federal National
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lemonade and Federal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and Lemonade 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 Lemonade are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Lemonade i.e., Lemonade and Federal National go up and down completely randomly.
Pair Corralation between Lemonade and Federal National
Given the investment horizon of 90 days Lemonade is expected to generate 1.07 times less return on investment than Federal National. But when comparing it to its historical volatility, Lemonade is 1.44 times less risky than Federal National. It trades about 0.28 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 560.00 in Federal National Mortgage on August 29, 2024 and sell it today you would earn a total of 950.00 from holding Federal National Mortgage or generate 169.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemonade vs. Federal National Mortgage
Performance |
| Timeline |
| Lemonade |
| Federal National Mortgage |
Lemonade and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemonade and Federal National
The main advantage of trading using opposite Lemonade and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemonade position performs unexpectedly, Federal National 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 National will offset losses from the drop in Federal National's long position.| Lemonade vs. Argo Group International | Lemonade vs. Selective Insurance Group | Lemonade vs. NI Holdings | Lemonade vs. Donegal Group A |
| Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal National Mortgage |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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