Correlation Between Federated Emerging and Federated Max-cap
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Federated Max-cap 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 Max-cap 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 Max Cap Index, you can compare the effects of market volatilities on Federated Emerging and Federated Max-cap 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 Max-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Federated Max-cap.
Diversification Opportunities for Federated Emerging and Federated Max-cap
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federated and Federated is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap 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 Max-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Federated Emerging i.e., Federated Emerging and Federated Max-cap go up and down completely randomly.
Pair Corralation between Federated Emerging and Federated Max-cap
Assuming the 90 days horizon Federated Emerging Market is expected to generate 0.29 times more return on investment than Federated Max-cap. However, Federated Emerging Market is 3.45 times less risky than Federated Max-cap. It trades about 0.11 of its potential returns per unit of risk. Federated Max Cap Index is currently generating about 0.02 per unit of risk. If you would invest 648.00 in Federated Emerging Market on November 2, 2024 and sell it today you would earn a total of 140.00 from holding Federated Emerging Market or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federated Emerging Market vs. Federated Max Cap Index
Performance |
| Timeline |
| Federated Emerging Market |
| Federated Max Cap |
Federated Emerging and Federated Max-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Federated Max-cap
The main advantage of trading using opposite Federated Emerging and Federated Max-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Federated Max-cap 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 Max-cap will offset losses from the drop in Federated Max-cap's long position.| Federated Emerging vs. Qs Large Cap | Federated Emerging vs. Fisher Large Cap | Federated Emerging vs. Virtus Nfj Large Cap | Federated Emerging vs. Smead Value Fund |
| Federated Max-cap vs. Columbia Large Cap | Federated Max-cap vs. Columbia Capital Allocation | Federated Max-cap vs. HUMANA INC | Federated Max-cap vs. Aquagold International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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