Correlation Between Fannie Mae and Panasonic Corp
Can any of the company-specific risk be diversified away by investing in both Fannie Mae and Panasonic Corp 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 Fannie Mae and Panasonic Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fannie Mae and Panasonic Corp, you can compare the effects of market volatilities on Fannie Mae and Panasonic Corp 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 Fannie Mae with a short position of Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fannie Mae and Panasonic Corp.
Diversification Opportunities for Fannie Mae and Panasonic Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fannie and Panasonic is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fannie Mae and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic Corp and Fannie Mae 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 Fannie Mae are associated (or correlated) with Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Fannie Mae i.e., Fannie Mae and Panasonic Corp go up and down completely randomly.
Pair Corralation between Fannie Mae and Panasonic Corp
Assuming the 90 days trading horizon Fannie Mae is expected to generate 3.83 times more return on investment than Panasonic Corp. However, Fannie Mae is 3.83 times more volatile than Panasonic Corp. It trades about 0.22 of its potential returns per unit of risk. Panasonic Corp is currently generating about 0.29 per unit of risk. If you would invest 121.00 in Fannie Mae on September 14, 2024 and sell it today you would earn a total of 154.00 from holding Fannie Mae or generate 127.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 68.75% |
Values | Daily Returns |
Fannie Mae vs. Panasonic Corp
Performance |
Timeline |
Fannie Mae |
Panasonic Corp |
Fannie Mae and Panasonic Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fannie Mae and Panasonic Corp
The main advantage of trading using opposite Fannie Mae and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fannie Mae position performs unexpectedly, Panasonic Corp 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 Panasonic Corp will offset losses from the drop in Panasonic Corp's long position.Fannie Mae vs. Premier Foods PLC | Fannie Mae vs. Taiwan Semiconductor Manufacturing | Fannie Mae vs. Gaztransport et Technigaz | Fannie Mae vs. EVS Broadcast Equipment |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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