Correlation Between Fannie Mae and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and Morgan Advanced 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 Fannie Mae and Morgan Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and Morgan Advanced Materials, you can compare the effects of market volatilities on Fannie Mae and Morgan Advanced 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 Fannie Mae with a short position of Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and Morgan Advanced.
Diversification Opportunities for Fannie Mae and Morgan Advanced
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fannie and Morgan is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials and Fannie Mae 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 Fannie Mae are associated (or correlated) with Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Fannie Mae i.e., Fannie Mae and Morgan Advanced go up and down completely randomly.
Pair Corralation between Fannie Mae and Morgan Advanced
Assuming the 90 days trading horizon Fannie Mae is expected to generate 3.72 times more return on investment than Morgan Advanced. However, Fannie Mae is 3.72 times more volatile than Morgan Advanced Materials. It trades about 0.19 of its potential returns per unit of risk. Morgan Advanced Materials is currently generating about -0.11 per unit of risk. If you would invest 280.00 in Fannie Mae on December 1, 2024 and sell it today you would earn a total of 349.00 from holding Fannie Mae or generate 124.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 91.94% |
Values | Daily Returns |
Fannie Mae vs. Morgan Advanced Materials
Performance |
Timeline |
Fannie Mae |
Morgan Advanced Materials |
Fannie Mae and Morgan Advanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fannie Mae and Morgan Advanced
The main advantage of trading using opposite Fannie Mae and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.Fannie Mae vs. JD Sports Fashion | Fannie Mae vs. Ecclesiastical Insurance Office | Fannie Mae vs. Spotify Technology SA | Fannie Mae vs. Playtech Plc |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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