Correlation Between Small Cap and Federated Fund
Can any of the company-specific risk be diversified away by investing in both Small Cap and Federated Fund 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 Small Cap and Federated Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Growth and Federated Fund For, you can compare the effects of market volatilities on Small Cap and Federated Fund 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 Small Cap with a short position of Federated Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Federated Fund.
Diversification Opportunities for Small Cap and Federated Fund
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMALL and Federated is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For and Small Cap 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 Small Cap Growth are associated (or correlated) with Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Small Cap i.e., Small Cap and Federated Fund go up and down completely randomly.
Pair Corralation between Small Cap and Federated Fund
Assuming the 90 days horizon Small Cap Growth is expected to generate 3.06 times more return on investment than Federated Fund. However, Small Cap is 3.06 times more volatile than Federated Fund For. It trades about 0.31 of its potential returns per unit of risk. Federated Fund For is currently generating about 0.05 per unit of risk. If you would invest 1,878 in Small Cap Growth on November 1, 2024 and sell it today you would earn a total of 112.00 from holding Small Cap Growth or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Growth vs. Federated Fund For
Performance |
| Timeline |
| Small Cap Growth |
| Federated Fund For |
Small Cap and Federated Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Federated Fund
The main advantage of trading using opposite Small Cap and Federated Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Federated Fund 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 Fund will offset losses from the drop in Federated Fund's long position.| Small Cap vs. City National Rochdale | Small Cap vs. Jpmorgan High Yield | Small Cap vs. Payden High Income | Small Cap vs. Tiaa Cref High Yield Fund |
| Federated Fund vs. Riverparknext Century Growth | Federated Fund vs. Growth Allocation Fund | Federated Fund vs. Small Cap Growth | Federated Fund vs. Qs Defensive Growth |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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