Correlation Between Federal National and Tandy Leather
Can any of the company-specific risk be diversified away by investing in both Federal National and Tandy Leather 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 Tandy Leather 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 Tandy Leather Factory, you can compare the effects of market volatilities on Federal National and Tandy Leather 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 Tandy Leather. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal National and Tandy Leather.
Diversification Opportunities for Federal National and Tandy Leather
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Tandy is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Federal National Mortgage and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory 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 Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Federal National i.e., Federal National and Tandy Leather go up and down completely randomly.
Pair Corralation between Federal National and Tandy Leather
Assuming the 90 days horizon Federal National Mortgage is expected to generate 1.25 times more return on investment than Tandy Leather. However, Federal National is 1.25 times more volatile than Tandy Leather Factory. It trades about 0.06 of its potential returns per unit of risk. Tandy Leather Factory is currently generating about -0.22 per unit of risk. If you would invest 5,230,000 in Federal National Mortgage on August 15, 2025 and sell it today you would earn a total of 260,000 from holding Federal National Mortgage or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Federal National Mortgage vs. Tandy Leather Factory
Performance |
| Timeline |
| Federal National Mortgage |
| Tandy Leather Factory |
Federal National and Tandy Leather Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal National and Tandy Leather
The main advantage of trading using opposite Federal National and Tandy Leather positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal National position performs unexpectedly, Tandy Leather 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 Tandy Leather will offset losses from the drop in Tandy Leather's long position.The idea behind Federal National Mortgage and Tandy Leather Factory 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.| Tandy Leather vs. SBDS | Tandy Leather vs. JBDI Holdings Limited | Tandy Leather vs. Evgo Inc | Tandy Leather vs. LightInTheBox Holding Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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