Correlation Between Us Government and Federated Government
Can any of the company-specific risk be diversified away by investing in both Us Government and Federated Government 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 Us Government and Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Federated Government Income, you can compare the effects of market volatilities on Us Government and Federated Government 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 Us Government with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Federated Government.
Diversification Opportunities for Us Government and Federated Government
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CGTFX and FEDERATED is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Federated Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government and Us Government 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 Us Government Securities are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Us Government i.e., Us Government and Federated Government go up and down completely randomly.
Pair Corralation between Us Government and Federated Government
Assuming the 90 days horizon Us Government Securities is expected to generate 1.02 times more return on investment than Federated Government. However, Us Government is 1.02 times more volatile than Federated Government Income. It trades about 0.15 of its potential returns per unit of risk. Federated Government Income is currently generating about 0.08 per unit of risk. If you would invest 1,172 in Us Government Securities on November 7, 2024 and sell it today you would earn a total of 13.00 from holding Us Government Securities or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Securities vs. Federated Government Income
Performance |
| Timeline |
| Us Government Securities |
| Federated Government |
Us Government and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Federated Government
The main advantage of trading using opposite Us Government and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Federated Government 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 Government will offset losses from the drop in Federated Government's long position.| Us Government vs. Dws Global Macro | Us Government vs. Gmo Global Equity | Us Government vs. Aqr Global Macro | Us Government vs. Ab Global Bond |
| Federated Government vs. Voya Government Money | Federated Government vs. Intermediate Government Bond | Federated Government vs. Hsbc Government Money | Federated Government vs. Virtus Seix Government |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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