Correlation Between DANAHER and Federal Home

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Can any of the company-specific risk be diversified away by investing in both DANAHER and Federal Home 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 DANAHER and Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DANAHER PORATION and Federal Home 530, you can compare the effects of market volatilities on DANAHER and Federal Home 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 DANAHER with a short position of Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of DANAHER and Federal Home.

Diversification Opportunities for DANAHER and Federal Home

DANAHERFederalDiversified AwayDANAHERFederalDiversified Away100%
0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between DANAHER and Federal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding DANAHER PORATION and Federal Home 530 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home 530 and DANAHER 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 DANAHER PORATION are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home 530 has no effect on the direction of DANAHER i.e., DANAHER and Federal Home go up and down completely randomly.

Pair Corralation between DANAHER and Federal Home

Assuming the 90 days trading horizon DANAHER PORATION is expected to generate 17.06 times more return on investment than Federal Home. However, DANAHER is 17.06 times more volatile than Federal Home 530. It trades about 0.08 of its potential returns per unit of risk. Federal Home 530 is currently generating about 0.09 per unit of risk. If you would invest  6,752  in DANAHER PORATION on December 12, 2024 and sell it today you would lose (757.00) from holding DANAHER PORATION or give up 11.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy82.19%
ValuesDaily Returns

DANAHER PORATION  vs.  Federal Home 530

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 2468101214
JavaScript chart by amCharts 3.21.15235851AV4 FREJP
       Timeline  
DANAHER PORATION 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DANAHER PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for DANAHER PORATION investors.
JavaScript chart by amCharts 3.21.1528233124585960616263
Federal Home 530 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Federal Home 530 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, Federal Home is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar16.51717.51818.5

DANAHER and Federal Home Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.88-1.43-0.98-0.53-0.08590.270.721.171.622.07 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15235851AV4 FREJP
       Returns  

Pair Trading with DANAHER and Federal Home

The main advantage of trading using opposite DANAHER and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DANAHER position performs unexpectedly, Federal Home 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 Home will offset losses from the drop in Federal Home's long position.
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The idea behind DANAHER PORATION and Federal Home 530 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.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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