Correlation Between GoldMining and Federal Realty

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

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

Diversification Opportunities for GoldMining and Federal Realty

0.38

Correlation Coefficient

GoldMining  Federal Realty

Weak diversification

The 3 months correlation between GoldMining and Federal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Federal Realty go up and down completely randomly.

Pair Corralation between GoldMining and Federal Realty

Assuming the 90 days trading horizon GoldMining is expected to under-perform the Federal Realty. In addition to that, GoldMining is 2.34 times more volatile than Federal Realty Investment. It trades about -0.15 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about -0.08 per unit of volatility. If you would invest  11,186  in Federal Realty Investment on October 6, 2024 and sell it today you would lose (163.00) from holding Federal Realty Investment or give up 1.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.95%
Values	Daily Returns

GoldMining  vs.  Federal Realty Investment

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining 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.

Federal Realty Investment

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Realty Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Federal Realty is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GoldMining and Federal Realty

The main advantage of trading using opposite GoldMining and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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 GoldMining 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.