Correlation Between Ab Impact and Federated Mdt

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Can any of the company-specific risk be diversified away by investing in both Ab Impact and Federated Mdt 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 Ab Impact and Federated Mdt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Impact Municipal and Federated Mdt All, you can compare the effects of market volatilities on Ab Impact and Federated Mdt 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 Ab Impact with a short position of Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Federated Mdt.

Diversification Opportunities for Ab Impact and Federated Mdt

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between ABIMX and Federated is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Federated Mdt All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt All and Ab Impact 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 Ab Impact Municipal are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt All has no effect on the direction of Ab Impact i.e., Ab Impact and Federated Mdt go up and down completely randomly.

Pair Corralation between Ab Impact and Federated Mdt

Assuming the 90 days horizon Ab Impact is expected to generate 4.19 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Ab Impact Municipal is 2.7 times less risky than Federated Mdt. It trades about 0.08 of its potential returns per unit of risk. Federated Mdt All is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,000  in Federated Mdt All on September 14, 2024 and sell it today you would earn a total of  2,034  from holding Federated Mdt All or generate 67.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ab Impact Municipal  vs.  Federated Mdt All

 Performance 
       Timeline  
Ab Impact Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ab Impact Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Ab Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Federated Mdt All 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt All are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Federated Mdt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ab Impact and Federated Mdt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Impact and Federated Mdt

The main advantage of trading using opposite Ab Impact and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.
The idea behind Ab Impact Municipal and Federated Mdt All 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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