Correlation Between Federated Emerging and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Federated Pennsylvania 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 Pennsylvania 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 Pennsylvania Municipal, you can compare the effects of market volatilities on Federated Emerging and Federated Pennsylvania 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 Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Federated Pennsylvania.
Diversification Opportunities for Federated Emerging and Federated Pennsylvania
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and FEDERATED is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania 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 Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Federated Emerging i.e., Federated Emerging and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Federated Emerging and Federated Pennsylvania
Assuming the 90 days horizon Federated Emerging is expected to generate 1.16 times less return on investment than Federated Pennsylvania. In addition to that, Federated Emerging is 1.17 times more volatile than Federated Pennsylvania Municipal. It trades about 0.05 of its total potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about 0.06 per unit of volatility. If you would invest 1,005 in Federated Pennsylvania Municipal on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Federated Pennsylvania Municipal or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Emerging Market vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Federated Emerging Market |
| Federated Pennsylvania |
Federated Emerging and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Federated Pennsylvania
The main advantage of trading using opposite Federated Emerging and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Federated Pennsylvania 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 Pennsylvania will offset losses from the drop in Federated Pennsylvania'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 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Correlations Find global opportunities by holding instruments from different markets |