Correlation Between Federal Agricultural and NEXON Co
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and NEXON Co 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 Agricultural and NEXON Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and NEXON Co, you can compare the effects of market volatilities on Federal Agricultural and NEXON Co 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 Agricultural with a short position of NEXON Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and NEXON Co.
Diversification Opportunities for Federal Agricultural and NEXON Co
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federal and NEXON is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON Co and Federal Agricultural 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 Agricultural Mortgage are associated (or correlated) with NEXON Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON Co has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and NEXON Co go up and down completely randomly.
Pair Corralation between Federal Agricultural and NEXON Co
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the NEXON Co. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 1.28 times less risky than NEXON Co. The stock trades about -0.02 of its potential returns per unit of risk. The NEXON Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,311 in NEXON Co on December 2, 2024 and sell it today you would lose (31.00) from holding NEXON Co or give up 2.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Federal Agricultural Mortgage vs. NEXON Co
Performance |
Timeline |
Federal Agricultural |
NEXON Co |
Federal Agricultural and NEXON Co Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal Agricultural and NEXON Co
The main advantage of trading using opposite Federal Agricultural and NEXON Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, NEXON Co 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 NEXON Co will offset losses from the drop in NEXON Co's long position.Federal Agricultural vs. Mitsui Chemicals | Federal Agricultural vs. AEGEAN AIRLINES | Federal Agricultural vs. Southwest Airlines Co | Federal Agricultural vs. Fast Retailing Co |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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