Correlation Between Federal National and Eneos Holdings

Can any of the company-specific risk be diversified away by investing in both Federal National and Eneos Holdings 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 Eneos Holdings 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 Eneos Holdings ADR, you can compare the effects of market volatilities on Federal National and Eneos Holdings 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 Eneos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Eneos Holdings.

Diversification Opportunities for Federal National and Eneos Holdings

-0.06

Correlation Coefficient

Federal National  Eneos Holdings

Good diversification

The 3 months correlation between Federal and Eneos is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR 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 Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of Federal National i.e., Federal National and Eneos Holdings go up and down completely randomly.

Pair Corralation between Federal National and Eneos Holdings

Assuming the 90 days horizon Federal National Mortgage is expected to generate 0.27 times more return on investment than Eneos Holdings. However, Federal National Mortgage is 3.69 times less risky than Eneos Holdings. It trades about 0.13 of its potential returns per unit of risk. Eneos Holdings ADR is currently generating about 0.03 per unit of risk. If you would invest  3,300,000  in Federal National Mortgage on December 2, 2024 and sell it today you would earn a total of  500,000  from holding Federal National Mortgage or generate 15.15% return on investment over 90 days.

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

Federal National Mortgage  vs.  Eneos Holdings ADR

Federal National Mortgage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 10 (%) 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.

Eneos Holdings ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Eneos Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal National and Eneos Holdings

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

The idea behind Federal National Mortgage and Eneos Holdings ADR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.