Correlation Between Federal Agricultural and PowerUp Acquisition

Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and PowerUp Acquisition 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 PowerUp Acquisition 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 PowerUp Acquisition Corp, you can compare the effects of market volatilities on Federal Agricultural and PowerUp Acquisition 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 PowerUp Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and PowerUp Acquisition.

Diversification Opportunities for Federal Agricultural and PowerUp Acquisition

-0.34

Correlation Coefficient

Federal Agricultural  PowerUp Acquisition

Very good diversification

The 3 months correlation between Federal and PowerUp is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and PowerUp Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerUp Acquisition Corp 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 PowerUp Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerUp Acquisition Corp has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and PowerUp Acquisition go up and down completely randomly.

Pair Corralation between Federal Agricultural and PowerUp Acquisition

Considering the 90-day investment horizon Federal Agricultural Mortgage is expected to generate 5.17 times more return on investment than PowerUp Acquisition. However, Federal Agricultural is 5.17 times more volatile than PowerUp Acquisition Corp. It trades about -0.02 of its potential returns per unit of risk. PowerUp Acquisition Corp is currently generating about -0.31 per unit of risk. If you would invest  21,348  in Federal Agricultural Mortgage on September 12, 2024 and sell it today you would lose (136.00) from holding Federal Agricultural Mortgage or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Federal Agricultural Mortgage  vs.  PowerUp Acquisition Corp

Federal Agricultural

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Agricultural Mortgage are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Federal Agricultural displayed solid returns over the last few months and may actually be approaching a breakup point.

PowerUp Acquisition Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PowerUp Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PowerUp Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Federal Agricultural and PowerUp Acquisition

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

The idea behind Federal Agricultural Mortgage and PowerUp Acquisition Corp 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.