Correlation Between Federal Agricultural and Smurfit Kappa

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

Diversification Opportunities for Federal Agricultural and Smurfit Kappa

0.0

Correlation Coefficient

Federal Agricultural  Smurfit Kappa

Pay attention - limited upside

The 3 months correlation between Federal and Smurfit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group 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 Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Smurfit Kappa go up and down completely randomly.

Pair Corralation between Federal Agricultural and Smurfit Kappa

If you would invest  19,472  in Federal Agricultural Mortgage on December 29, 2024 and sell it today you would lose (43.00) from holding Federal Agricultural Mortgage or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Federal Agricultural Mortgage  vs.  Smurfit Kappa Group

Federal Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Agricultural Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Federal Agricultural is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Smurfit Kappa Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smurfit Kappa Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Smurfit Kappa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federal Agricultural and Smurfit Kappa

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

The idea behind Federal Agricultural Mortgage and Smurfit Kappa Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.