Correlation Between Paysafe and Federal National

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

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

Diversification Opportunities for Paysafe and Federal National

0.37

Correlation Coefficient

Paysafe  Federal National

Weak diversification

The 3 months correlation between Paysafe and Federal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe 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 Paysafe 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 Paysafe 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 Paysafe i.e., Paysafe and Federal National go up and down completely randomly.

Pair Corralation between Paysafe and Federal National

Given the investment horizon of 90 days Paysafe is expected to generate 61.01 times less return on investment than Federal National. But when comparing it to its historical volatility, Paysafe is 2.52 times less risky than Federal National. It trades about 0.01 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  233.00  in Federal National Mortgage on December 4, 2024 and sell it today you would earn a total of  407.00  from holding Federal National Mortgage or generate 174.68% return on investment over 90 days.

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

Paysafe  vs.  Federal National Mortgage

Paysafe

Risk-Adjusted Performance

Very Weak

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

Federal National Mortgage

Risk-Adjusted Performance

Good

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 somewhat inconsistent primary indicators, Federal National sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paysafe and Federal National

The main advantage of trading using opposite Paysafe and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paysafe 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 Paysafe 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.