Correlation Between Federated Emerging and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Federated Equity 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 Emerging and Federated Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Emerging Market and Federated Equity Income, you can compare the effects of market volatilities on Federated Emerging and Federated Equity 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 Emerging with a short position of Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Federated Equity.
Diversification Opportunities for Federated Emerging and Federated Equity
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Federated is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income and Federated Emerging 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 Emerging Market are associated (or correlated) with Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Federated Emerging i.e., Federated Emerging and Federated Equity go up and down completely randomly.
Pair Corralation between Federated Emerging and Federated Equity
Assuming the 90 days horizon Federated Emerging Market is expected to generate 0.4 times more return on investment than Federated Equity. However, Federated Emerging Market is 2.48 times less risky than Federated Equity. It trades about 0.13 of its potential returns per unit of risk. Federated Equity Income is currently generating about 0.04 per unit of risk. If you would invest 634.00 in Federated Emerging Market on November 28, 2024 and sell it today you would earn a total of 163.00 from holding Federated Emerging Market or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Federated Equity Income
Performance |
| Timeline |
| Federated Emerging Market |
| Federated Equity Income |
Federated Emerging and Federated Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Federated Equity
The main advantage of trading using opposite Federated Emerging and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Federated Equity 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 Equity will offset losses from the drop in Federated Equity's long position.| Federated Emerging vs. Pgim Jennison Technology | Federated Emerging vs. Blackrock Science Technology | Federated Emerging vs. Science Technology Fund | Federated Emerging vs. Virtus Artificial Intelligence |
| Federated Equity vs. Federated Emerging Market | Federated Equity vs. Federated Mdt All | Federated Equity vs. Federated Mdt Balanced | Federated Equity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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