Correlation Between PHI and Federal Natl
Can any of the company-specific risk be diversified away by investing in both PHI and Federal Natl 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 PHI and Federal Natl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHI Group and Federal Natl Mtg, you can compare the effects of market volatilities on PHI and Federal Natl 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 PHI with a short position of Federal Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHI and Federal Natl.
Diversification Opportunities for PHI and Federal Natl
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PHI and Federal is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PHI Group and Federal Natl Mtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Natl Mtg and PHI 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 PHI Group are associated (or correlated) with Federal Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Natl Mtg has no effect on the direction of PHI i.e., PHI and Federal Natl go up and down completely randomly.
Pair Corralation between PHI and Federal Natl
Given the investment horizon of 90 days PHI Group is expected to generate 3.9 times more return on investment than Federal Natl. However, PHI is 3.9 times more volatile than Federal Natl Mtg. It trades about 0.23 of its potential returns per unit of risk. Federal Natl Mtg is currently generating about 0.3 per unit of risk. If you would invest 0.02 in PHI Group on September 1, 2024 and sell it today you would earn a total of 0.00 from holding PHI Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
PHI Group vs. Federal Natl Mtg
Performance |
| Timeline |
| PHI Group |
| Federal Natl Mtg |
PHI and Federal Natl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHI and Federal Natl
The main advantage of trading using opposite PHI and Federal Natl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHI position performs unexpectedly, Federal Natl 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 Natl will offset losses from the drop in Federal Natl's long position.The idea behind PHI Group and Federal Natl Mtg pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Federal Natl vs. Federal National Mortgage | Federal Natl vs. Federal Home Loan | Federal Natl vs. Federal National Mortgage | Federal Natl 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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