Correlation Between Federal National and Osprey Solana

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

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

Diversification Opportunities for Federal National and Osprey Solana

0.68

Correlation Coefficient

Federal National  Osprey Solana

Poor diversification

The 3 months correlation between Federal and Osprey is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Osprey Solana Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osprey Solana Trust and Federal National 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 National Mortgage are associated (or correlated) with Osprey Solana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osprey Solana Trust has no effect on the direction of Federal National i.e., Federal National and Osprey Solana go up and down completely randomly.

Pair Corralation between Federal National and Osprey Solana

Assuming the 90 days horizon Federal National Mortgage is expected to generate 0.67 times more return on investment than Osprey Solana. However, Federal National Mortgage is 1.48 times less risky than Osprey Solana. It trades about 0.29 of its potential returns per unit of risk. Osprey Solana Trust is currently generating about 0.14 per unit of risk. If you would invest  2,530,000  in Federal National Mortgage on September 22, 2024 and sell it today you would earn a total of  870,000  from holding Federal National Mortgage or generate 34.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Federal National Mortgage  vs.  Osprey Solana Trust

Federal National Mortgage

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Federal National displayed solid returns over the last few months and may actually be approaching a breakup point.

Osprey Solana Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Osprey Solana Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Osprey Solana disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal National and Osprey Solana

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

The idea behind Federal National Mortgage and Osprey Solana Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.