Correlation Between High Yield and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both High Yield and Federated Institutional 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 High Yield and Federated Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund Investor and Federated Institutional High, you can compare the effects of market volatilities on High Yield and Federated Institutional 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 High Yield with a short position of Federated Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Federated Institutional.
Diversification Opportunities for High Yield and Federated Institutional
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between High and Federated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund Investor and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional and High Yield 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 High Yield Fund Investor are associated (or correlated) with Federated Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of High Yield i.e., High Yield and Federated Institutional go up and down completely randomly.
Pair Corralation between High Yield and Federated Institutional
Assuming the 90 days horizon High Yield is expected to generate 1.06 times less return on investment than Federated Institutional. In addition to that, High Yield is 1.1 times more volatile than Federated Institutional High. It trades about 0.2 of its total potential returns per unit of risk. Federated Institutional High is currently generating about 0.23 per unit of volatility. If you would invest 844.00 in Federated Institutional High on August 26, 2024 and sell it today you would earn a total of 48.00 from holding Federated Institutional High or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Fund Investor vs. Federated Institutional High
Performance |
| Timeline |
| High Yield Fund |
| Federated Institutional |
High Yield and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Federated Institutional
The main advantage of trading using opposite High Yield and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Federated Institutional 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 Federated Institutional will offset losses from the drop in Federated Institutional's long position.| High Yield vs. Mid Cap Value | High Yield vs. Equity Growth Fund | High Yield vs. Income Growth Fund | High Yield vs. Diversified Bond Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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