Correlation Between Freddie Mac and Xeros Technology

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

Diversification Opportunities for Freddie Mac and Xeros Technology

FreddieXerosDiversified AwayFreddieXerosDiversified Away100%
0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Freddie and Xeros is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Freddie Mac and Xeros Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeros Technology and Freddie Mac 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 Freddie Mac are associated (or correlated) with Xeros Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeros Technology has no effect on the direction of Freddie Mac i.e., Freddie Mac and Xeros Technology go up and down completely randomly.

Pair Corralation between Freddie Mac and Xeros Technology

Assuming the 90 days trading horizon Freddie Mac is expected to generate 1.42 times less return on investment than Xeros Technology. In addition to that, Freddie Mac is 1.15 times more volatile than Xeros Technology Group. It trades about 0.16 of its total potential returns per unit of risk. Xeros Technology Group is currently generating about 0.26 per unit of volatility. If you would invest  43.00  in Xeros Technology Group on November 18, 2024 and sell it today you would earn a total of  87.00  from holding Xeros Technology Group or generate 202.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Freddie Mac  vs.  Xeros Technology Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100
JavaScript chart by amCharts 3.21.150IKZ XSG
       Timeline  
Freddie Mac 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Freddie Mac are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Freddie Mac unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb34567
Xeros Technology 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Xeros Technology Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Xeros Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.60.811.21.4

Freddie Mac and Xeros Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-26.87-20.13-13.38-6.630.07.1614.5721.9729.3836.78 0.00500.00550.00600.00650.0070
JavaScript chart by amCharts 3.21.150IKZ XSG
       Returns  

Pair Trading with Freddie Mac and Xeros Technology

The main advantage of trading using opposite Freddie Mac and Xeros Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freddie Mac position performs unexpectedly, Xeros Technology 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 Xeros Technology will offset losses from the drop in Xeros Technology's long position.
The idea behind Freddie Mac and Xeros Technology Group 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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