Correlation Between Federal Realty and LBG Media
Can any of the company-specific risk be diversified away by investing in both Federal Realty and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Federal Realty and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and LBG Media.
Diversification Opportunities for Federal Realty and LBG Media
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and LBG is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Federal Realty i.e., Federal Realty and LBG Media go up and down completely randomly.
Pair Corralation between Federal Realty and LBG Media
Assuming the 90 days trading horizon Federal Realty is expected to generate 2.13 times less return on investment than LBG Media. But when comparing it to its historical volatility, Federal Realty Investment is 2.4 times less risky than LBG Media. It trades about 0.07 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,760 in LBG Media PLC on September 6, 2024 and sell it today you would earn a total of 3,390 from holding LBG Media PLC or generate 38.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.21% |
Values | Daily Returns |
Federal Realty Investment vs. LBG Media PLC
Performance |
Timeline |
Federal Realty Investment |
LBG Media PLC |
Federal Realty and LBG Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal Realty and LBG Media
The main advantage of trading using opposite Federal Realty and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Samsung Electronics Co | Federal Realty vs. Hyundai Motor | Federal Realty vs. Toyota Motor Corp |
LBG Media vs. Check Point Software | LBG Media vs. Pets at Home | LBG Media vs. Cars Inc | LBG Media vs. Sunny Optical Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |