Correlation Between Intuitive Machines and Federal National

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

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

Diversification Opportunities for Intuitive Machines and Federal National

0.85

Correlation Coefficient

Intuitive Machines  Federal National

Very poor diversification

The 3 months correlation between Intuitive and Federal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and Intuitive Machines 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 Intuitive Machines are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Intuitive Machines i.e., Intuitive Machines and Federal National go up and down completely randomly.

Pair Corralation between Intuitive Machines and Federal National

Given the investment horizon of 90 days Intuitive Machines is expected to generate 1.12 times less return on investment than Federal National. But when comparing it to its historical volatility, Intuitive Machines is 1.09 times less risky than Federal National. It trades about 0.21 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Federal National Mortgage on October 20, 2024 and sell it today you would earn a total of  1,224  from holding Federal National Mortgage or generate 163.2% return on investment over 90 days.

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

Intuitive Machines  vs.  Federal National Mortgage

Intuitive Machines

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Federal National Mortgage

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Federal National disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuitive Machines and Federal National

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

The idea behind Intuitive Machines and Federal National Mortgage 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.