Correlation Between Aerovate Therapeutics and Federal National
Can any of the company-specific risk be diversified away by investing in both Aerovate Therapeutics and Federal National 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 Aerovate Therapeutics and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerovate Therapeutics and Federal National Mortgage, you can compare the effects of market volatilities on Aerovate Therapeutics and Federal National 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 Aerovate Therapeutics with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerovate Therapeutics and Federal National.
Diversification Opportunities for Aerovate Therapeutics and Federal National
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aerovate and Federal is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aerovate Therapeutics and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and Aerovate Therapeutics 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 Aerovate Therapeutics are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Aerovate Therapeutics i.e., Aerovate Therapeutics and Federal National go up and down completely randomly.
Pair Corralation between Aerovate Therapeutics and Federal National
Given the investment horizon of 90 days Aerovate Therapeutics is expected to under-perform the Federal National. But the stock apears to be less risky and, when comparing its historical volatility, Aerovate Therapeutics is 1.14 times less risky than Federal National. The stock trades about -0.06 of its potential returns per unit of risk. The Federal National Mortgage is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,736 in Federal National Mortgage on December 3, 2024 and sell it today you would earn a total of 164.00 from holding Federal National Mortgage or generate 9.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aerovate Therapeutics vs. Federal National Mortgage
Performance |
Timeline |
Aerovate Therapeutics |
Federal National Mortgage |
Aerovate Therapeutics and Federal National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aerovate Therapeutics and Federal National
The main advantage of trading using opposite Aerovate Therapeutics and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerovate Therapeutics position performs unexpectedly, Federal National 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 National will offset losses from the drop in Federal National's long position.Aerovate Therapeutics vs. Adagene | Aerovate Therapeutics vs. Acrivon Therapeutics, Common | Aerovate Therapeutics vs. Rezolute | Aerovate Therapeutics vs. AN2 Therapeutics |
Federal National vs. Federal National Mortgage | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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