Correlation Between Bridge Investment and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Bridge Investment and Federated Premier 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 Bridge Investment and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridge Investment Group and Federated Premier Municipal, you can compare the effects of market volatilities on Bridge Investment and Federated Premier 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 Bridge Investment with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridge Investment and Federated Premier.
Diversification Opportunities for Bridge Investment and Federated Premier
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bridge and Federated is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bridge Investment Group and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Bridge Investment 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 Bridge Investment Group are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Bridge Investment i.e., Bridge Investment and Federated Premier go up and down completely randomly.
Pair Corralation between Bridge Investment and Federated Premier
Given the investment horizon of 90 days Bridge Investment Group is expected to under-perform the Federated Premier. In addition to that, Bridge Investment is 4.69 times more volatile than Federated Premier Municipal. It trades about -0.01 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.02 per unit of volatility. If you would invest 1,078 in Federated Premier Municipal on November 3, 2024 and sell it today you would earn a total of 32.00 from holding Federated Premier Municipal or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bridge Investment Group vs. Federated Premier Municipal
Performance |
| Timeline |
| Bridge Investment |
| Federated Premier |
Bridge Investment and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridge Investment and Federated Premier
The main advantage of trading using opposite Bridge Investment and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridge Investment position performs unexpectedly, Federated Premier 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 Premier will offset losses from the drop in Federated Premier's long position.| Bridge Investment vs. Federated Premier Municipal | Bridge Investment vs. Blackrock Muniyield | Bridge Investment vs. Diamond Hill Investment | Bridge Investment vs. NXG NextGen Infrastructure |
| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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