Correlation Between National Atomic and Federal Realty

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

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

Diversification Opportunities for National Atomic and Federal Realty

0.37

Correlation Coefficient

National Atomic  Federal Realty

Weak diversification

The 3 months correlation between National and Federal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and National Atomic 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 National Atomic Co are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of National Atomic i.e., National Atomic and Federal Realty go up and down completely randomly.

Pair Corralation between National Atomic and Federal Realty

Assuming the 90 days trading horizon National Atomic Co is expected to generate 1.36 times more return on investment than Federal Realty. However, National Atomic is 1.36 times more volatile than Federal Realty Investment. It trades about -0.04 of its potential returns per unit of risk. Federal Realty Investment is currently generating about -0.18 per unit of risk. If you would invest  3,730  in National Atomic Co on December 25, 2024 and sell it today you would lose (185.00) from holding National Atomic Co or give up 4.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

National Atomic Co  vs.  Federal Realty Investment

National Atomic

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Atomic Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, National Atomic is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Federal Realty Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Atomic and Federal Realty

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

The idea behind National Atomic Co and Federal Realty Investment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.