Correlation Between X Financial and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both X Financial 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 X Financial and Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Financial Class and Federal Agricultural Mortgage, you can compare the effects of market volatilities on X Financial 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 X Financial with a short position of Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Financial and Federal Agricultural.
Diversification Opportunities for X Financial and Federal Agricultural
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XYF and Federal is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and X Financial 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 X Financial Class 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 X Financial i.e., X Financial and Federal Agricultural go up and down completely randomly.
Pair Corralation between X Financial and Federal Agricultural
Considering the 90-day investment horizon X Financial Class is expected to generate 3.13 times more return on investment than Federal Agricultural. However, X Financial is 3.13 times more volatile than Federal Agricultural Mortgage. It trades about 0.06 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.02 per unit of risk. If you would invest 389.00 in X Financial Class on August 28, 2024 and sell it today you would earn a total of 261.00 from holding X Financial Class or generate 67.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Financial Class vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| X Financial Class |
| Federal Agricultural |
X Financial and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Financial and Federal Agricultural
The main advantage of trading using opposite X Financial and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Financial 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.| X Financial vs. Orix Corp Ads | X Financial vs. Medallion Financial Corp | X Financial vs. Oportun Financial Corp | X Financial vs. SLM Corp Pb |
| Federal Agricultural vs. Capital One Financial | Federal Agricultural vs. Capital One Financial | Federal Agricultural vs. JPMorgan Chase Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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