Correlation Between Bbh Intermediate and Federated Corporate
Can any of the company-specific risk be diversified away by investing in both Bbh Intermediate and Federated Corporate 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 Bbh Intermediate and Federated Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bbh Intermediate Municipal and Federated Porate Bond, you can compare the effects of market volatilities on Bbh Intermediate and Federated Corporate 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 Bbh Intermediate with a short position of Federated Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bbh Intermediate and Federated Corporate.
Diversification Opportunities for Bbh Intermediate and Federated Corporate
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBH and Federated is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bbh Intermediate Municipal and Federated Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Porate Bond and Bbh Intermediate 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 Bbh Intermediate Municipal are associated (or correlated) with Federated Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Porate Bond has no effect on the direction of Bbh Intermediate i.e., Bbh Intermediate and Federated Corporate go up and down completely randomly.
Pair Corralation between Bbh Intermediate and Federated Corporate
Assuming the 90 days horizon Bbh Intermediate is expected to generate 1.53 times less return on investment than Federated Corporate. But when comparing it to its historical volatility, Bbh Intermediate Municipal is 1.56 times less risky than Federated Corporate. It trades about 0.15 of its potential returns per unit of risk. Federated Porate Bond is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,008 in Federated Porate Bond on September 4, 2024 and sell it today you would earn a total of 12.00 from holding Federated Porate Bond or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bbh Intermediate Municipal vs. Federated Porate Bond
Performance |
| Timeline |
| Bbh Intermediate Mun |
| Federated Porate Bond |
Bbh Intermediate and Federated Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bbh Intermediate and Federated Corporate
The main advantage of trading using opposite Bbh Intermediate and Federated Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bbh Intermediate position performs unexpectedly, Federated Corporate 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 Corporate will offset losses from the drop in Federated Corporate's long position.| Bbh Intermediate vs. Bbh Limited Duration | Bbh Intermediate vs. Bbh Limited Duration | Bbh Intermediate vs. Bbh Partner Fund | Bbh Intermediate vs. Bbh Partner Fund |
| Federated Corporate vs. Dodge Cox Stock | Federated Corporate vs. Fundamental Large Cap | Federated Corporate vs. Qs Large Cap | Federated Corporate vs. Dunham Large Cap |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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