Correlation Between Regional Management and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Regional Management and Federal Agricultural 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 Regional Management and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Regional Management and Federal Agricultural 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 Regional Management with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Federal Agricultural.
Diversification Opportunities for Regional Management and Federal Agricultural
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Regional and Federal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Regional Management 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 Regional Management Corp are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Regional Management i.e., Regional Management and Federal Agricultural go up and down completely randomly.
Pair Corralation between Regional Management and Federal Agricultural
Allowing for the 90-day total investment horizon Regional Management is expected to generate 1.69 times less return on investment than Federal Agricultural. In addition to that, Regional Management is 1.07 times more volatile than Federal Agricultural Mortgage. It trades about 0.12 of its total potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.22 per unit of volatility. If you would invest 18,600 in Federal Agricultural Mortgage on August 27, 2024 and sell it today you would earn a total of 2,495 from holding Federal Agricultural Mortgage or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| Regional Management Corp |
| Federal Agricultural |
Regional Management and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Federal Agricultural
The main advantage of trading using opposite Regional Management and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Federal Agricultural 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 Agricultural will offset losses from the drop in Federal Agricultural's long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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