Correlation Between Vitec Software and Federal Realty

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

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

Diversification Opportunities for Vitec Software and Federal Realty

-0.03

Correlation Coefficient

Vitec Software  Federal Realty

Good diversification

The 3 months correlation between Vitec and Federal is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Vitec Software 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 Vitec Software Group are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Vitec Software i.e., Vitec Software and Federal Realty go up and down completely randomly.

Pair Corralation between Vitec Software and Federal Realty

Assuming the 90 days trading horizon Vitec Software Group is expected to generate 1.46 times more return on investment than Federal Realty. However, Vitec Software is 1.46 times more volatile than Federal Realty Investment. It trades about 0.05 of its potential returns per unit of risk. Federal Realty Investment is currently generating about -0.15 per unit of risk. If you would invest  53,400  in Vitec Software Group on December 22, 2024 and sell it today you would earn a total of  2,900  from holding Vitec Software Group or generate 5.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Vitec Software Group  vs.  Federal Realty Investment

Vitec Software Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vitec Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Federal Realty Investment

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vitec Software and Federal Realty

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

The idea behind Vitec Software Group and Federal Realty Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.