Correlation Between Federal Home and Agrify Corp

Can any of the company-specific risk be diversified away by investing in both Federal Home and Agrify 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 Federal Home and Agrify Corp 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 Agrify Corp, you can compare the effects of market volatilities on Federal Home and Agrify 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 Federal Home with a short position of Agrify Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Agrify Corp.

Diversification Opportunities for Federal Home and Agrify Corp

0.76

Correlation Coefficient

Federal Home  Agrify Corp

Poor diversification

The 3 months correlation between Federal and Agrify is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home Loan and Agrify Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrify Corp 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 Agrify Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrify Corp has no effect on the direction of Federal Home i.e., Federal Home and Agrify Corp go up and down completely randomly.

Pair Corralation between Federal Home and Agrify Corp

Assuming the 90 days horizon Federal Home is expected to generate 3.03 times less return on investment than Agrify Corp. But when comparing it to its historical volatility, Federal Home Loan is 1.68 times less risky than Agrify Corp. It trades about 0.18 of its potential returns per unit of risk. Agrify Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Agrify Corp on September 3, 2024 and sell it today you would earn a total of  5,321  from holding Agrify Corp or generate 1503.11% 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.  Agrify Corp

Federal Home Loan

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Federal Home disclosed solid returns over the last few months and may actually be approaching a breakup point.

Agrify Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Agrify Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Agrify Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal Home and Agrify Corp

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

The idea behind Federal Home Loan and Agrify Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.