Correlation Between Associates First and Federal Agricultural

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

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

Diversification Opportunities for Associates First and Federal Agricultural

0.0

Correlation Coefficient

Associates First  Federal Agricultural

Pay attention - limited upside

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

Pair Corralation between Associates First and Federal Agricultural

If you would invest  2,187  in Federal Agricultural Mortgage on December 30, 2024 and sell it today you would earn a total of  73.00  from holding Federal Agricultural Mortgage or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Associates First Capital  vs.  Federal Agricultural Mortgage

Associates First Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associates First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Associates First is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federal Agricultural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Agricultural Mortgage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Federal Agricultural is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Associates First and Federal Agricultural

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

The idea behind Associates First Capital and Federal Agricultural Mortgage 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.