Correlation Between Federated Bond and Gabelli Healthcare
Can any of the company-specific risk be diversified away by investing in both Federated Bond and Gabelli Healthcare 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 Gabelli Healthcare 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 The Gabelli Healthcare, you can compare the effects of market volatilities on Federated Bond and Gabelli Healthcare 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 Gabelli Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Bond and Gabelli Healthcare.
Diversification Opportunities for Federated Bond and Gabelli Healthcare
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Gabelli is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federated Bond Fund and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare 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 Gabelli Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of Federated Bond i.e., Federated Bond and Gabelli Healthcare go up and down completely randomly.
Pair Corralation between Federated Bond and Gabelli Healthcare
Assuming the 90 days horizon Federated Bond is expected to generate 1.38 times less return on investment than Gabelli Healthcare. But when comparing it to its historical volatility, Federated Bond Fund is 2.8 times less risky than Gabelli Healthcare. It trades about 0.09 of its potential returns per unit of risk. The Gabelli Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,060 in The Gabelli Healthcare on September 14, 2024 and sell it today you would earn a total of 102.00 from holding The Gabelli Healthcare or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Bond Fund vs. The Gabelli Healthcare
Performance |
| Timeline |
| Federated Bond |
| The Gabelli Healthcare |
Federated Bond and Gabelli Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Bond and Gabelli Healthcare
The main advantage of trading using opposite Federated Bond and Gabelli Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Bond position performs unexpectedly, Gabelli Healthcare 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 Gabelli Healthcare will offset losses from the drop in Gabelli Healthcare's long position.| Federated Bond vs. The Gabelli Healthcare | Federated Bond vs. Baron Health Care | Federated Bond vs. Lord Abbett Health | Federated Bond vs. Highland Longshort Healthcare |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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