Correlation Between Fulcrum Diversified and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Fulcrum Diversified and Federated Hermes 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 Fulcrum Diversified and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fulcrum Diversified Absolute and Federated Hermes Conservative, you can compare the effects of market volatilities on Fulcrum Diversified and Federated Hermes 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 Fulcrum Diversified with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Diversified and Federated Hermes.
Diversification Opportunities for Fulcrum Diversified and Federated Hermes
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fulcrum and Federated is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con and Fulcrum Diversified 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 Fulcrum Diversified Absolute are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Federated Hermes go up and down completely randomly.
Pair Corralation between Fulcrum Diversified and Federated Hermes
Assuming the 90 days horizon Fulcrum Diversified is expected to generate 1.85 times less return on investment than Federated Hermes. In addition to that, Fulcrum Diversified is 4.04 times more volatile than Federated Hermes Conservative. It trades about 0.03 of its total potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.22 per unit of volatility. If you would invest 899.00 in Federated Hermes Conservative on September 14, 2024 and sell it today you would earn a total of 102.00 from holding Federated Hermes Conservative or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fulcrum Diversified Absolute vs. Federated Hermes Conservative
Performance |
| Timeline |
| Fulcrum Diversified |
| Federated Hermes Con |
Fulcrum Diversified and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fulcrum Diversified and Federated Hermes
The main advantage of trading using opposite Fulcrum Diversified and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Diversified position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Fulcrum Diversified vs. Health Biotchnology Portfolio | Fulcrum Diversified vs. Tekla Healthcare Opportunities | Fulcrum Diversified vs. Eventide Healthcare Life | Fulcrum Diversified vs. Live Oak Health |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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