Correlation Between Ford and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Ford and Federated Strategic 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 Ford and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Federated Strategic Income, you can compare the effects of market volatilities on Ford and Federated Strategic 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 Ford with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Federated Strategic.
Diversification Opportunities for Ford and Federated Strategic
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Federated is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic and Ford 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 Ford Motor are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Ford i.e., Ford and Federated Strategic go up and down completely randomly.
Pair Corralation between Ford and Federated Strategic
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Federated Strategic. In addition to that, Ford is 10.56 times more volatile than Federated Strategic Income. It trades about 0.0 of its total potential returns per unit of risk. Federated Strategic Income is currently generating about 0.0 per unit of volatility. If you would invest 822.00 in Federated Strategic Income on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Federated Strategic Income or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ford Motor vs. Federated Strategic Income
Performance |
| Timeline |
| Ford Motor |
| Federated Strategic |
Ford and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Federated Strategic
The main advantage of trading using opposite Ford and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.The idea behind Ford Motor and Federated Strategic Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Federated Strategic vs. 1919 Financial Services | Federated Strategic vs. First Trust Specialty | Federated Strategic vs. Gabelli Global Financial | Federated Strategic vs. Icon Financial Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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