Correlation Between Federated Hermes and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Emerging 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 Hermes and Federated Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes and Federated Emerging Market, you can compare the effects of market volatilities on Federated Hermes and Federated Emerging 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 Hermes with a short position of Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Emerging.
Diversification Opportunities for Federated Hermes and Federated Emerging
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market and Federated Hermes 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 Hermes are associated (or correlated) with Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Emerging go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Emerging
Assuming the 90 days horizon Federated Hermes is expected to generate 2.55 times less return on investment than Federated Emerging. In addition to that, Federated Hermes is 1.38 times more volatile than Federated Emerging Market. It trades about 0.03 of its total potential returns per unit of risk. Federated Emerging Market is currently generating about 0.12 per unit of volatility. If you would invest 730.00 in Federated Emerging Market on September 14, 2024 and sell it today you would earn a total of 67.00 from holding Federated Emerging Market or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes vs. Federated Emerging Market
Performance |
| Timeline |
| Federated Hermes |
| Federated Emerging Market |
Federated Hermes and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Emerging
The main advantage of trading using opposite Federated Hermes and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Emerging 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 Emerging will offset losses from the drop in Federated Emerging's long position.| Federated Hermes vs. Federated Emerging Market | Federated Hermes vs. Federated Mdt All | Federated Hermes vs. Federated Mdt Balanced | Federated Hermes vs. Federated Global Allocation |
| Federated Emerging vs. Guidemark Large Cap | Federated Emerging vs. Cb Large Cap | Federated Emerging vs. Transamerica Large Cap | Federated Emerging vs. Avantis Large Cap |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |