Correlation Between Federated Emerging and Federated Ohio
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Federated Ohio 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 Ohio 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 Ohio Municipal, you can compare the effects of market volatilities on Federated Emerging and Federated Ohio 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 Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Federated Ohio.
Diversification Opportunities for Federated Emerging and Federated Ohio
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Federated Ohio Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ohio Municipal 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 Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ohio Municipal has no effect on the direction of Federated Emerging i.e., Federated Emerging and Federated Ohio go up and down completely randomly.
Pair Corralation between Federated Emerging and Federated Ohio
Assuming the 90 days horizon Federated Emerging is expected to generate 1.0 times less return on investment than Federated Ohio. In addition to that, Federated Emerging is 1.07 times more volatile than Federated Ohio Municipal. It trades about 0.12 of its total potential returns per unit of risk. Federated Ohio Municipal is currently generating about 0.13 per unit of volatility. If you would invest 1,042 in Federated Ohio Municipal on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Federated Ohio Municipal or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Federated Ohio Municipal
Performance |
| Timeline |
| Federated Emerging Market |
| Federated Ohio Municipal |
Federated Emerging and Federated Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Federated Ohio
The main advantage of trading using opposite Federated Emerging and Federated Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Federated Ohio 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 Ohio will offset losses from the drop in Federated Ohio's long position.| Federated Emerging vs. Evaluator Conservative Rms | Federated Emerging vs. Aqr Diversified Arbitrage | Federated Emerging vs. Fidelity Advisor Diversified | Federated Emerging vs. Prudential Core Conservative |
| Federated Ohio vs. Gmo Resources | Federated Ohio vs. Fidelity Advisor Energy | Federated Ohio vs. Calvert Global Energy | Federated Ohio vs. Energy Basic Materials |
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 Stocks Directory module to find actively traded stocks across global markets.
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