Correlation Between Thyssenkrupp and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp 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 Thyssenkrupp and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between thyssenkrupp AG and Federal Agricultural Mortgage, you can compare the effects of market volatilities on Thyssenkrupp 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 Thyssenkrupp with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and Federal Agricultural.
Diversification Opportunities for Thyssenkrupp and Federal Agricultural
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thyssenkrupp and Federal is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding thyssenkrupp AG and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Thyssenkrupp 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 thyssenkrupp AG 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 Thyssenkrupp i.e., Thyssenkrupp and Federal Agricultural go up and down completely randomly.
Pair Corralation between Thyssenkrupp and Federal Agricultural
Assuming the 90 days horizon thyssenkrupp AG is expected to generate 1.81 times more return on investment than Federal Agricultural. However, Thyssenkrupp is 1.81 times more volatile than Federal Agricultural Mortgage. It trades about 0.36 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.17 per unit of risk. If you would invest 334.00 in thyssenkrupp AG on September 12, 2024 and sell it today you would earn a total of 76.00 from holding thyssenkrupp AG or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
thyssenkrupp AG vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| thyssenkrupp AG |
| Federal Agricultural |
Thyssenkrupp and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and Federal Agricultural
The main advantage of trading using opposite Thyssenkrupp and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp 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.| Thyssenkrupp vs. VIRG NATL BANKSH | Thyssenkrupp vs. WisdomTree Investments | Thyssenkrupp vs. JSC Halyk bank | Thyssenkrupp vs. CDN IMPERIAL BANK |
| Federal Agricultural vs. Fair Isaac Corp | Federal Agricultural vs. Enter Air SA | Federal Agricultural vs. Ryanair Holdings plc | Federal Agricultural vs. Wizz Air Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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