Correlation Between 629377CH3 and Freedom Bank

Can any of the company-specific risk be diversified away by investing in both 629377CH3 and Freedom Bank 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 629377CH3 and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NRG Energy 525 and Freedom Bank of, you can compare the effects of market volatilities on 629377CH3 and Freedom Bank 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 629377CH3 with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of 629377CH3 and Freedom Bank.

Diversification Opportunities for 629377CH3 and Freedom Bank

0.42

Correlation Coefficient

629377CH3  Freedom Bank

Very weak diversification

The 3 months correlation between 629377CH3 and Freedom is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy 525 and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and 629377CH3 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 NRG Energy 525 are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of 629377CH3 i.e., 629377CH3 and Freedom Bank go up and down completely randomly.

Pair Corralation between 629377CH3 and Freedom Bank

Assuming the 90 days trading horizon NRG Energy 525 is expected to generate 2.23 times more return on investment than Freedom Bank. However, 629377CH3 is 2.23 times more volatile than Freedom Bank of. It trades about 0.02 of its potential returns per unit of risk. Freedom Bank of is currently generating about -0.13 per unit of risk. If you would invest  9,685  in NRG Energy 525 on December 26, 2024 and sell it today you would earn a total of  125.00  from holding NRG Energy 525 or generate 1.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

NRG Energy 525  vs.  Freedom Bank of

NRG Energy 525

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy 525 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 629377CH3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Freedom Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with 629377CH3 and Freedom Bank

The main advantage of trading using opposite 629377CH3 and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 629377CH3 position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.

The idea behind NRG Energy 525 and Freedom Bank of 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.