Correlation Between Federal Realty and Edita Food

Can any of the company-specific risk be diversified away by investing in both Federal Realty and Edita Food 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 Federal Realty and Edita Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federal Realty Investment and Edita Food Industries, you can compare the effects of market volatilities on Federal Realty and Edita Food 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 Federal Realty with a short position of Edita Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Edita Food.

Diversification Opportunities for Federal Realty and Edita Food

-0.45

Correlation Coefficient

Federal Realty  Edita Food

Very good diversification

The 3 months correlation between Federal and Edita is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Edita Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edita Food Industries and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Edita Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edita Food Industries has no effect on the direction of Federal Realty i.e., Federal Realty and Edita Food go up and down completely randomly.

Pair Corralation between Federal Realty and Edita Food

Assuming the 90 days trading horizon Federal Realty is expected to generate 1.62 times less return on investment than Edita Food. In addition to that, Federal Realty is 1.66 times more volatile than Edita Food Industries. It trades about 0.08 of its total potential returns per unit of risk. Edita Food Industries is currently generating about 0.22 per unit of volatility. If you would invest  195.00  in Edita Food Industries on September 17, 2024 and sell it today you would earn a total of  5.00  from holding Edita Food Industries or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Federal Realty Investment  vs.  Edita Food Industries

Federal Realty Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Federal Realty is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Edita Food Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edita Food Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Federal Realty and Edita Food

The main advantage of trading using opposite Federal Realty and Edita Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Edita Food 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 Edita Food will offset losses from the drop in Edita Food's long position.

The idea behind Federal Realty Investment and Edita Food Industries 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.