Correlation Between Samsung Electronics and Fannie Mae
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics and Fannie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Fannie Mae, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of Fannie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Fannie Mae.
Diversification Opportunities for Samsung Electronics and Fannie Mae
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Fannie is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Fannie Mae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fannie Mae and Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and Fannie Mae go up and down completely randomly.
Pair Corralation between Samsung Electronics and Fannie Mae
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 153.04 times less return on investment than Fannie Mae. But when comparing it to its historical volatility, Samsung Electronics Co is 4.45 times less risky than Fannie Mae. It trades about 0.01 of its potential returns per unit of risk. Fannie Mae is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Fannie Mae on August 29, 2024 and sell it today you would earn a total of 178.00 from holding Fannie Mae or generate 122.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Samsung Electronics Co vs. Fannie Mae
Performance |
| Timeline |
| Samsung Electronics |
| Fannie Mae |
Samsung Electronics and Fannie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Fannie Mae
The main advantage of trading using opposite Samsung Electronics and Fannie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
| Fannie Mae vs. Roadside Real Estate | Fannie Mae vs. Ecclesiastical Insurance Office | Fannie Mae vs. Broadcom | Fannie Mae vs. MT Bank Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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