Correlation Between Federal Home and Security National

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

By analyzing existing cross correlation between Federal Home Loan and Security National Financial, you can compare the effects of market volatilities on Federal Home and Security 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 Federal Home with a short position of Security National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Security National.

Diversification Opportunities for Federal Home and Security National

0.86

Correlation Coefficient

Federal Home  Security National

Very poor diversification

The 3 months correlation between Federal and Security is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Security National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security National and Federal Home 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 Home Loan are associated (or correlated) with Security National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security National has no effect on the direction of Federal Home i.e., Federal Home and Security National go up and down completely randomly.

Pair Corralation between Federal Home and Security National

Given the investment horizon of 90 days Federal Home Loan is expected to generate 3.36 times more return on investment than Security National. However, Federal Home is 3.36 times more volatile than Security National Financial. It trades about 0.13 of its potential returns per unit of risk. Security National Financial is currently generating about 0.41 per unit of risk. If you would invest  221.00  in Federal Home Loan on September 12, 2024 and sell it today you would earn a total of  42.00  from holding Federal Home Loan or generate 19.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Federal Home Loan  vs.  Security National Financial

Federal Home Loan

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Federal Home exhibited solid returns over the last few months and may actually be approaching a breakup point.

Security National

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Security National Financial are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Security National sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal Home and Security National

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

The idea behind Federal Home Loan and Security National Financial 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.