Correlation Between Red Cat and Federal Hme
Can any of the company-specific risk be diversified away by investing in both Red Cat and Federal Hme 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 Red Cat and Federal Hme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Federal Hme 655, you can compare the effects of market volatilities on Red Cat and Federal Hme 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 Red Cat with a short position of Federal Hme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Federal Hme.
Diversification Opportunities for Red Cat and Federal Hme
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and Federal is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Federal Hme 655 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Hme 655 and Red Cat 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 Red Cat Holdings are associated (or correlated) with Federal Hme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Hme 655 has no effect on the direction of Red Cat i.e., Red Cat and Federal Hme go up and down completely randomly.
Pair Corralation between Red Cat and Federal Hme
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 1.85 times more return on investment than Federal Hme. However, Red Cat is 1.85 times more volatile than Federal Hme 655. It trades about 0.07 of its potential returns per unit of risk. Federal Hme 655 is currently generating about 0.0 per unit of risk. If you would invest 846.00 in Red Cat Holdings on November 22, 2024 and sell it today you would earn a total of 45.00 from holding Red Cat Holdings or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Federal Hme 655
Performance |
| Timeline |
| Red Cat Holdings |
| Federal Hme 655 |
Red Cat and Federal Hme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Federal Hme
The main advantage of trading using opposite Red Cat and Federal Hme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Federal Hme 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 Hme will offset losses from the drop in Federal Hme's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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