Correlation Between Federated Equity and Cutler Equity
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Cutler Equity 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 Equity and Cutler Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Equity Income and Cutler Equity, you can compare the effects of market volatilities on Federated Equity and Cutler Equity 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 Equity with a short position of Cutler Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Cutler Equity.
Diversification Opportunities for Federated Equity and Cutler Equity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Cutler is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Cutler Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutler Equity and Federated Equity 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 Equity Income are associated (or correlated) with Cutler Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutler Equity has no effect on the direction of Federated Equity i.e., Federated Equity and Cutler Equity go up and down completely randomly.
Pair Corralation between Federated Equity and Cutler Equity
Assuming the 90 days horizon Federated Equity is expected to generate 1.2 times less return on investment than Cutler Equity. In addition to that, Federated Equity is 1.13 times more volatile than Cutler Equity. It trades about 0.12 of its total potential returns per unit of risk. Cutler Equity is currently generating about 0.16 per unit of volatility. If you would invest 2,591 in Cutler Equity on September 1, 2024 and sell it today you would earn a total of 348.00 from holding Cutler Equity or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Federated Equity Income vs. Cutler Equity
Performance |
| Timeline |
| Federated Equity Income |
| Cutler Equity |
Federated Equity and Cutler Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Cutler Equity
The main advantage of trading using opposite Federated Equity and Cutler Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Cutler Equity 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 Cutler Equity will offset losses from the drop in Cutler Equity's long position.| Federated Equity vs. Delaware Limited Term Diversified | Federated Equity vs. Lord Abbett Diversified | Federated Equity vs. Massmutual Premier Diversified | Federated Equity vs. Pimco Diversified Income |
| Cutler Equity vs. Fidelity Sai Convertible | Cutler Equity vs. Virtus Convertible | Cutler Equity vs. Putnam Convertible Incm Gwth | Cutler Equity vs. Allianzgi Convertible Income |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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