Correlation Between Federated Prudent and Vanguard Financials
Can any of the company-specific risk be diversified away by investing in both Federated Prudent and Vanguard Financials 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 Federated Prudent and Vanguard Financials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Prudent Bear and Vanguard Financials Index, you can compare the effects of market volatilities on Federated Prudent and Vanguard Financials 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 Federated Prudent with a short position of Vanguard Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Prudent and Vanguard Financials.
Diversification Opportunities for Federated Prudent and Vanguard Financials
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federated and Vanguard is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Federated Prudent Bear and Vanguard Financials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Financials Index and Federated Prudent 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 Federated Prudent Bear are associated (or correlated) with Vanguard Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Financials Index has no effect on the direction of Federated Prudent i.e., Federated Prudent and Vanguard Financials go up and down completely randomly.
Pair Corralation between Federated Prudent and Vanguard Financials
Assuming the 90 days horizon Federated Prudent Bear is expected to under-perform the Vanguard Financials. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Prudent Bear is 1.71 times less risky than Vanguard Financials. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Vanguard Financials Index is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,473 in Vanguard Financials Index on September 3, 2024 and sell it today you would earn a total of 844.00 from holding Vanguard Financials Index or generate 15.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Prudent Bear vs. Vanguard Financials Index
Performance |
| Timeline |
| Federated Prudent Bear |
| Vanguard Financials Index |
Federated Prudent and Vanguard Financials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Prudent and Vanguard Financials
The main advantage of trading using opposite Federated Prudent and Vanguard Financials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Prudent position performs unexpectedly, Vanguard Financials 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 Vanguard Financials will offset losses from the drop in Vanguard Financials' long position.| Federated Prudent vs. Vanguard Financials Index | Federated Prudent vs. 1919 Financial Services | Federated Prudent vs. Angel Oak Financial | Federated Prudent vs. Icon Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |