Correlation Between Mindflair Plc and Fannie Mae
Can any of the company-specific risk be diversified away by investing in both Mindflair Plc and Fannie Mae 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 Mindflair Plc and Fannie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mindflair Plc and Fannie Mae, you can compare the effects of market volatilities on Mindflair Plc and Fannie Mae 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 Mindflair Plc with a short position of Fannie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mindflair Plc and Fannie Mae.
Diversification Opportunities for Mindflair Plc and Fannie Mae
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mindflair and Fannie is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mindflair Plc and Fannie Mae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fannie Mae and Mindflair Plc 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 Mindflair Plc are associated (or correlated) with Fannie Mae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fannie Mae has no effect on the direction of Mindflair Plc i.e., Mindflair Plc and Fannie Mae go up and down completely randomly.
Pair Corralation between Mindflair Plc and Fannie Mae
Assuming the 90 days trading horizon Mindflair Plc is expected to generate 31.29 times less return on investment than Fannie Mae. But when comparing it to its historical volatility, Mindflair Plc is 8.28 times less risky than Fannie Mae. It trades about 0.08 of its potential returns per unit of risk. Fannie Mae is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 164.00 in Fannie Mae on August 24, 2024 and sell it today you would earn a total of 158.00 from holding Fannie Mae or generate 96.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mindflair Plc vs. Fannie Mae
Performance |
| Timeline |
| Mindflair Plc |
| Fannie Mae |
Mindflair Plc and Fannie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mindflair Plc and Fannie Mae
The main advantage of trading using opposite Mindflair Plc and Fannie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mindflair Plc position performs unexpectedly, Fannie Mae 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 Fannie Mae will offset losses from the drop in Fannie Mae's long position.| Mindflair Plc vs. CATCo Reinsurance Opportunities | Mindflair Plc vs. Fair Oaks Income | Mindflair Plc vs. Legal General Group | Mindflair Plc vs. Intermediate Capital Group |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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