Correlation Between Century Small and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Century Small and Federated Hermes 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 Century Small and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Small Cap and Federated Hermes Sdg, you can compare the effects of market volatilities on Century Small and Federated Hermes 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 Century Small with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Small and Federated Hermes.
Diversification Opportunities for Century Small and Federated Hermes
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Century and Federated is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Century Small Cap and Federated Hermes Sdg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Sdg and Century Small 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 Century Small Cap are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Sdg has no effect on the direction of Century Small i.e., Century Small and Federated Hermes go up and down completely randomly.
Pair Corralation between Century Small and Federated Hermes
Assuming the 90 days horizon Century Small is expected to generate 2.77 times less return on investment than Federated Hermes. In addition to that, Century Small is 1.66 times more volatile than Federated Hermes Sdg. It trades about 0.03 of its total potential returns per unit of risk. Federated Hermes Sdg is currently generating about 0.13 per unit of volatility. If you would invest 1,439 in Federated Hermes Sdg on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Federated Hermes Sdg or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Small Cap vs. Federated Hermes Sdg
Performance |
| Timeline |
| Century Small Cap |
| Federated Hermes Sdg |
Century Small and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Small and Federated Hermes
The main advantage of trading using opposite Century Small and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Small position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Century Small vs. Third Avenue Real | Century Small vs. Aegis Value Fund | Century Small vs. Litman Gregory Masters | Century Small vs. Marsico Growth Fund |
| Federated Hermes vs. Federated Emerging Market | Federated Hermes vs. Federated Mdt All | Federated Hermes vs. Federated Mdt Balanced | Federated Hermes vs. Federated Global Allocation |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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