Correlation Between Federated Hermes and M Large
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and M Large 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 M Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes and M Large Cap, you can compare the effects of market volatilities on Federated Hermes and M Large 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 M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and M Large.
Diversification Opportunities for Federated Hermes and M Large
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and MTCGX is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Federated Hermes i.e., Federated Hermes and M Large go up and down completely randomly.
Pair Corralation between Federated Hermes and M Large
Assuming the 90 days horizon Federated Hermes is expected to generate 6.72 times less return on investment than M Large. But when comparing it to its historical volatility, Federated Hermes is 2.45 times less risky than M Large. It trades about 0.03 of its potential returns per unit of risk. M Large Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,670 in M Large Cap on September 2, 2024 and sell it today you would earn a total of 1,021 from holding M Large Cap or generate 38.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes vs. M Large Cap
Performance |
| Timeline |
| Federated Hermes |
| M Large Cap |
Federated Hermes and M Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and M Large
The main advantage of trading using opposite Federated Hermes and M Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, M Large 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 M Large will offset losses from the drop in M Large's long position.| Federated Hermes vs. Clearbridge Energy Mlp | Federated Hermes vs. Franklin Natural Resources | Federated Hermes vs. Tortoise Energy Independence | Federated Hermes vs. Calvert Global Energy |
| M Large vs. Prudential Real Estate | M Large vs. Jhancock Real Estate | M Large vs. Great West Real Estate | M Large vs. Fidelity Real Estate |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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