Correlation Between Commonwealth Global and Federated Short-term
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Federated Short-term 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 Commonwealth Global and Federated Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Global Fund and Federated Short Term Income, you can compare the effects of market volatilities on Commonwealth Global and Federated Short-term 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 Commonwealth Global with a short position of Federated Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Federated Short-term.
Diversification Opportunities for Commonwealth Global and Federated Short-term
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commonwealth and Federated is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term and Commonwealth Global 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 Commonwealth Global Fund are associated (or correlated) with Federated Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Federated Short-term go up and down completely randomly.
Pair Corralation between Commonwealth Global and Federated Short-term
Assuming the 90 days horizon Commonwealth Global Fund is expected to generate 6.16 times more return on investment than Federated Short-term. However, Commonwealth Global is 6.16 times more volatile than Federated Short Term Income. It trades about 0.27 of its potential returns per unit of risk. Federated Short Term Income is currently generating about 0.05 per unit of risk. If you would invest 2,090 in Commonwealth Global Fund on September 4, 2024 and sell it today you would earn a total of 82.00 from holding Commonwealth Global Fund or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Federated Short Term Income
Performance |
| Timeline |
| Commonwealth Global |
| Federated Short Term |
Commonwealth Global and Federated Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Federated Short-term
The main advantage of trading using opposite Commonwealth Global and Federated Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global position performs unexpectedly, Federated Short-term 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 Short-term will offset losses from the drop in Federated Short-term's long position.| Commonwealth Global vs. Commonwealth Real Estate | Commonwealth Global vs. Buffalo Growth Fund | Commonwealth Global vs. Aquagold International | Commonwealth Global vs. Morningstar Unconstrained Allocation |
| Federated Short-term vs. Ftfa Franklin Templeton Growth | Federated Short-term vs. Nationwide Growth Fund | Federated Short-term vs. T Rowe Price | Federated Short-term vs. Pace Large Growth |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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