Correlation Between Federated Emerging and Federated Clover
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Federated Clover 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 Clover 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 Clover Small, you can compare the effects of market volatilities on Federated Emerging and Federated Clover 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 Clover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Federated Clover.
Diversification Opportunities for Federated Emerging and Federated Clover
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Federated is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Federated Clover Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Clover Small 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 Clover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Clover Small has no effect on the direction of Federated Emerging i.e., Federated Emerging and Federated Clover go up and down completely randomly.
Pair Corralation between Federated Emerging and Federated Clover
Assuming the 90 days horizon Federated Emerging Market is expected to generate 0.18 times more return on investment than Federated Clover. However, Federated Emerging Market is 5.62 times less risky than Federated Clover. It trades about 0.37 of its potential returns per unit of risk. Federated Clover Small is currently generating about -0.1 per unit of risk. If you would invest 789.00 in Federated Emerging Market on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Federated Emerging Market or generate 1.27% 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 Clover Small
Performance |
| Timeline |
| Federated Emerging Market |
| Federated Clover Small |
Federated Emerging and Federated Clover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Federated Clover
The main advantage of trading using opposite Federated Emerging and Federated Clover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Federated Clover 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 Clover will offset losses from the drop in Federated Clover's long position.| Federated Emerging vs. Dws Government Money | Federated Emerging vs. Western Asset Municipal | Federated Emerging vs. Dreyfusstandish Global Fixed |
| Federated Clover vs. Red Oak Technology | Federated Clover vs. Falcon Focus Scv | Federated Clover vs. Acm Dynamic Opportunity | Federated Clover vs. Leggmason Partners Institutional |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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