Correlation Between Federal National and Golden Tag

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

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

Diversification Opportunities for Federal National and Golden Tag

0.0

Correlation Coefficient

Federal National  Golden Tag

Pay attention - limited upside

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

Pair Corralation between Federal National and Golden Tag

If you would invest  3,400,000  in Federal National Mortgage on December 27, 2024 and sell it today you would earn a total of  500,000  from holding Federal National Mortgage or generate 14.71% return on investment over 90 days.

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

Federal National Mortgage  vs.  Golden Tag Resources

Federal National Mortgage

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Federal National displayed solid returns over the last few months and may actually be approaching a breakup point.

Golden Tag Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Tag Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Golden Tag is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Federal National and Golden Tag

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

The idea behind Federal National Mortgage and Golden Tag Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.