Correlation Between American Funds and Federated High
Can any of the company-specific risk be diversified away by investing in both American Funds and Federated High 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 American Funds and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Federated High Yield, you can compare the effects of market volatilities on American Funds and Federated High 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 American Funds with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Federated High.
Diversification Opportunities for American Funds and Federated High
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Federated is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and American Funds 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 American Funds American are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of American Funds i.e., American Funds and Federated High go up and down completely randomly.
Pair Corralation between American Funds and Federated High
Assuming the 90 days horizon American Funds American is expected to generate 0.88 times more return on investment than Federated High. However, American Funds American is 1.14 times less risky than Federated High. It trades about 0.34 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.26 per unit of risk. If you would invest 971.00 in American Funds American on October 25, 2024 and sell it today you would earn a total of 14.00 from holding American Funds American or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Federated High Yield
Performance |
| Timeline |
| American Funds American |
| Federated High Yield |
American Funds and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Federated High
The main advantage of trading using opposite American Funds and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Federated High 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 High will offset losses from the drop in Federated High's long position.| American Funds vs. Metropolitan West Porate | American Funds vs. Versatile Bond Portfolio | American Funds vs. T Rowe Price | American Funds vs. Blrc Sgy Mnp |
| Federated High vs. Jpmorgan High Yield | Federated High vs. Lord Abbett Short | Federated High vs. T Rowe Price | Federated High vs. Voya High Yield |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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