Correlation Between Federal Home and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Federal Home and DFS Furniture 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 Federal Home and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home Loan and DFS Furniture PLC, you can compare the effects of market volatilities on Federal Home and DFS Furniture 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 Federal Home with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and DFS Furniture.
Diversification Opportunities for Federal Home and DFS Furniture
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and DFS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Federal Home 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 Federal Home Loan are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Federal Home i.e., Federal Home and DFS Furniture go up and down completely randomly.
Pair Corralation between Federal Home and DFS Furniture
Assuming the 90 days horizon Federal Home Loan is expected to generate 2.78 times more return on investment than DFS Furniture. However, Federal Home is 2.78 times more volatile than DFS Furniture PLC. It trades about 0.1 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.22 per unit of risk. If you would invest 458.00 in Federal Home Loan on April 24, 2025 and sell it today you would earn a total of 132.00 from holding Federal Home Loan or generate 28.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Federal Home Loan vs. DFS Furniture PLC
Performance |
Timeline |
Federal Home Loan |
DFS Furniture PLC |
Federal Home and DFS Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federal Home and DFS Furniture
The main advantage of trading using opposite Federal Home and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.Federal Home vs. MONEYSUPERMARKET | Federal Home vs. TAL Education Group | Federal Home vs. Axfood AB | Federal Home vs. Performance Food Group |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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