Correlation Between Absolute Convertible and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Federated Strategic 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 Absolute Convertible and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Federated Strategic Income, you can compare the effects of market volatilities on Absolute Convertible and Federated Strategic 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 Absolute Convertible with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Federated Strategic.
Diversification Opportunities for Absolute Convertible and Federated Strategic
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Absolute and Federated is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Federated Strategic go up and down completely randomly.
Pair Corralation between Absolute Convertible and Federated Strategic
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.23 times more return on investment than Federated Strategic. However, Absolute Convertible Arbitrage is 4.32 times less risky than Federated Strategic. It trades about 0.51 of its potential returns per unit of risk. Federated Strategic Income is currently generating about 0.04 per unit of risk. If you would invest 1,132 in Absolute Convertible Arbitrage on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Absolute Convertible Arbitrage or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Federated Strategic Income
Performance |
| Timeline |
| Absolute Convertible |
| Federated Strategic |
Absolute Convertible and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Federated Strategic
The main advantage of trading using opposite Absolute Convertible and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.| Absolute Convertible vs. Vy Goldman Sachs | Absolute Convertible vs. Invesco Gold Special | Absolute Convertible vs. Short Precious Metals | Absolute Convertible vs. Franklin Gold Precious |
| Federated Strategic vs. Inverse Government Long | Federated Strategic vs. Elfun Government Money | Federated Strategic vs. Long Term Government Fund | Federated Strategic vs. Hsbc Government Money |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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