Correlation Between Home Point and Federal Home

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

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

Diversification Opportunities for Home Point and Federal Home

0.9

Correlation Coefficient

Home Point  Federal Home

Almost no diversification

The 3 months correlation between Home and Federal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Home Point Capital and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and Home Point 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 Home Point Capital are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Home Point i.e., Home Point and Federal Home go up and down completely randomly.

Pair Corralation between Home Point and Federal Home

If you would invest  743.00  in Federal Home Loan on October 23, 2024 and sell it today you would earn a total of  1,157  from holding Federal Home Loan or generate 155.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.67%
Values	Daily Returns

Home Point Capital  vs.  Federal Home Loan

Home Point Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Point Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Home Point is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Federal Home Loan

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Federal Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Point and Federal Home

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

The idea behind Home Point Capital and Federal Home Loan 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.