Correlation Between Young Cos and Freddie Mac
Can any of the company-specific risk be diversified away by investing in both Young Cos and Freddie Mac 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 Young Cos and Freddie Mac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Young Cos Brewery and Freddie Mac, you can compare the effects of market volatilities on Young Cos and Freddie Mac 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 Young Cos with a short position of Freddie Mac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Young Cos and Freddie Mac.
Diversification Opportunities for Young Cos and Freddie Mac
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Young and Freddie is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Young Cos Brewery and Freddie Mac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freddie Mac and Young Cos 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 Young Cos Brewery are associated (or correlated) with Freddie Mac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freddie Mac has no effect on the direction of Young Cos i.e., Young Cos and Freddie Mac go up and down completely randomly.
Pair Corralation between Young Cos and Freddie Mac
Assuming the 90 days trading horizon Young Cos is expected to generate 241.26 times less return on investment than Freddie Mac. But when comparing it to its historical volatility, Young Cos Brewery is 8.98 times less risky than Freddie Mac. It trades about 0.02 of its potential returns per unit of risk. Freddie Mac is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 134.00 in Freddie Mac on August 31, 2024 and sell it today you would earn a total of 181.00 from holding Freddie Mac or generate 135.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Young Cos Brewery vs. Freddie Mac
Performance |
| Timeline |
| Young Cos Brewery |
| Freddie Mac |
Young Cos and Freddie Mac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Young Cos and Freddie Mac
The main advantage of trading using opposite Young Cos and Freddie Mac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Young Cos position performs unexpectedly, Freddie Mac 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 Freddie Mac will offset losses from the drop in Freddie Mac's long position.| Young Cos vs. Berkshire Hathaway | Young Cos vs. Hyundai Motor | Young Cos vs. Samsung Electronics Co | Young Cos vs. Samsung Electronics Co |
| Freddie Mac vs. Lowland Investment Co | Freddie Mac vs. Ryanair Holdings plc | Freddie Mac vs. Air Products Chemicals | Freddie Mac vs. Delta Air Lines |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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