Correlation Between Astar and Federal Natl
Can any of the company-specific risk be diversified away by investing in both Astar and Federal Natl 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 Astar and Federal Natl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Federal Natl Mtg, you can compare the effects of market volatilities on Astar and Federal Natl 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 Astar with a short position of Federal Natl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Federal Natl.
Diversification Opportunities for Astar and Federal Natl
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Astar and Federal is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Federal Natl Mtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Natl Mtg and Astar 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 Astar are associated (or correlated) with Federal Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Natl Mtg has no effect on the direction of Astar i.e., Astar and Federal Natl go up and down completely randomly.
Pair Corralation between Astar and Federal Natl
Assuming the 90 days trading horizon Astar is expected to under-perform the Federal Natl. In addition to that, Astar is 1.54 times more volatile than Federal Natl Mtg. It trades about -0.11 of its total potential returns per unit of risk. Federal Natl Mtg is currently generating about 0.06 per unit of volatility. If you would invest 926.00 in Federal Natl Mtg on October 26, 2024 and sell it today you would earn a total of 24.00 from holding Federal Natl Mtg or generate 2.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 86.36% |
Values | Daily Returns |
Astar vs. Federal Natl Mtg
Performance |
Timeline |
Astar |
Federal Natl Mtg |
Astar and Federal Natl Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Astar and Federal Natl
The main advantage of trading using opposite Astar and Federal Natl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Federal Natl 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 Natl will offset losses from the drop in Federal Natl's long position.The idea behind Astar and Federal Natl Mtg 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.Federal Natl vs. Federal National Mortgage | Federal Natl vs. Federal Home Loan | Federal Natl vs. Federal National Mortgage | Federal Natl vs. Federal National Mortgage |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |