Correlation Between Federated Porate and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Federated Porate and Dow Jones 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 Porate and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Porate Bond and Dow Jones Industrial, you can compare the effects of market volatilities on Federated Porate and Dow Jones 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 Porate with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Porate and Dow Jones.
Diversification Opportunities for Federated Porate and Dow Jones
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Dow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Federated Porate Bond and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Federated Porate 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 Porate Bond are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Federated Porate i.e., Federated Porate and Dow Jones go up and down completely randomly.
Pair Corralation between Federated Porate and Dow Jones
Assuming the 90 days horizon Federated Porate Bond is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Porate Bond is 2.24 times less risky than Dow Jones. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,109,677 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 315,106 from holding Dow Jones Industrial or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Porate Bond vs. Dow Jones Industrial
Performance |
| Timeline |
Federated Porate and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Federated Porate Bond
Pair trading matchups for Federated Porate
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Federated Porate and Dow Jones
The main advantage of trading using opposite Federated Porate and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Porate position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Federated Porate vs. Columbia Real Estate | Federated Porate vs. Prudential Real Estate | Federated Porate vs. Dunham Real Estate | Federated Porate vs. Pender Real Estate |
| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |