Correlation Between Government Bond and Federated Total
Can any of the company-specific risk be diversified away by investing in both Government Bond and Federated Total 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 Government Bond and Federated Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Bond Fund and Federated Total Return, you can compare the effects of market volatilities on Government Bond and Federated Total 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 Government Bond with a short position of Federated Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Bond and Federated Total.
Diversification Opportunities for Government Bond and Federated Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between GOVERNMENT and Federated is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Government Bond Fund and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return and Government Bond 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 Government Bond Fund are associated (or correlated) with Federated Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Government Bond i.e., Government Bond and Federated Total go up and down completely randomly.
Pair Corralation between Government Bond and Federated Total
Assuming the 90 days horizon Government Bond is expected to generate 1.15 times less return on investment than Federated Total. In addition to that, Government Bond is 1.04 times more volatile than Federated Total Return. It trades about 0.08 of its total potential returns per unit of risk. Federated Total Return is currently generating about 0.1 per unit of volatility. If you would invest 937.00 in Federated Total Return on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Federated Total Return or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Government Bond Fund vs. Federated Total Return
Performance |
| Timeline |
| Government Bond |
| Federated Total Return |
Government Bond and Federated Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Bond and Federated Total
The main advantage of trading using opposite Government Bond and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Bond position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total's long position.| Government Bond vs. Vanguard Gnma Fund | Government Bond vs. Us Government Securities | Government Bond vs. American Funds Government | Government Bond vs. Fidelity Sai Treasury |
| Federated Total vs. Pax Balanced Fund | Federated Total vs. Emerging Markets Portfolio | Federated Total vs. Hartford Capital Appreciation | Federated Total vs. Government 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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