Correlation Between Federated Bond and Federated Ultrashort
Can any of the company-specific risk be diversified away by investing in both Federated Bond and Federated Ultrashort 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 Bond and Federated Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Bond Fund and Federated Ultrashort Bond, you can compare the effects of market volatilities on Federated Bond and Federated Ultrashort 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 Bond with a short position of Federated Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Bond and Federated Ultrashort.
Diversification Opportunities for Federated Bond and Federated Ultrashort
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Federated is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Federated Bond Fund and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort Bond and Federated Bond 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 Bond Fund are associated (or correlated) with Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Federated Bond i.e., Federated Bond and Federated Ultrashort go up and down completely randomly.
Pair Corralation between Federated Bond and Federated Ultrashort
Assuming the 90 days horizon Federated Bond Fund is expected to generate 2.73 times more return on investment than Federated Ultrashort. However, Federated Bond is 2.73 times more volatile than Federated Ultrashort Bond. It trades about 0.11 of its potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.21 per unit of risk. If you would invest 807.00 in Federated Bond Fund on September 1, 2024 and sell it today you would earn a total of 31.00 from holding Federated Bond Fund or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Bond Fund vs. Federated Ultrashort Bond
Performance |
| Timeline |
| Federated Bond |
| Federated Ultrashort Bond |
Federated Bond and Federated Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Bond and Federated Ultrashort
The main advantage of trading using opposite Federated Bond and Federated Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Bond position performs unexpectedly, Federated Ultrashort 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 Ultrashort will offset losses from the drop in Federated Ultrashort's long position.| Federated Bond vs. Federated Emerging Market | Federated Bond vs. Federated Mdt All | Federated Bond vs. Federated Mdt Balanced | Federated Bond vs. Federated Global Allocation |
| Federated Ultrashort vs. Federated Emerging Market | Federated Ultrashort vs. Federated Mdt All | Federated Ultrashort vs. Federated Mdt Balanced | Federated Ultrashort vs. Federated Global Allocation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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