Correlation Between The Brown and Federated
Can any of the company-specific risk be diversified away by investing in both The Brown and Federated 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 The Brown and Federated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Brown Capital and Federated Gov Sec, you can compare the effects of market volatilities on The Brown and Federated 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 The Brown with a short position of Federated. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Brown and Federated.
Diversification Opportunities for The Brown and Federated
Excellent diversification
The 3 months correlation between The and Federated is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Brown Capital and Federated Gov Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Gov Sec and The Brown 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 The Brown Capital are associated (or correlated) with Federated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Gov Sec has no effect on the direction of The Brown i.e., The Brown and Federated go up and down completely randomly.
Pair Corralation between The Brown and Federated
Assuming the 90 days horizon The Brown Capital is expected to generate 20.09 times more return on investment than Federated. However, The Brown is 20.09 times more volatile than Federated Gov Sec. It trades about 0.33 of its potential returns per unit of risk. Federated Gov Sec is currently generating about 0.06 per unit of risk. If you would invest 7,194 in The Brown Capital on September 5, 2024 and sell it today you would earn a total of 831.00 from holding The Brown Capital or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Brown Capital vs. Federated Gov Sec
Performance |
| Timeline |
| Brown Capital |
| Federated Gov Sec |
The Brown and Federated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Brown and Federated
The main advantage of trading using opposite The Brown and Federated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Brown position performs unexpectedly, Federated 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 will offset losses from the drop in Federated's long position.| The Brown vs. American Beacon Bridgeway | The Brown vs. Akre Focus Fund | The Brown vs. Large Cap Fund | The Brown vs. Amg Managers Skyline |
| Federated vs. Federated Government Income | Federated vs. Nationwide Fund Institutional | Federated vs. Federated Max Cap Index | Federated vs. The Brown Capital |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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