Correlation Between Federated Equity and Gmo Us
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Gmo Us 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 Gmo Us 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 Gmo Equity Allocation, you can compare the effects of market volatilities on Federated Equity and Gmo Us 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 Gmo Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Gmo Us.
Diversification Opportunities for Federated Equity and Gmo Us
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FEDERATED and GMO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Gmo Equity Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Equity Allocation 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 Gmo Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Equity Allocation has no effect on the direction of Federated Equity i.e., Federated Equity and Gmo Us go up and down completely randomly.
Pair Corralation between Federated Equity and Gmo Us
Assuming the 90 days horizon Federated Equity Income is expected to generate 0.73 times more return on investment than Gmo Us. However, Federated Equity Income is 1.37 times less risky than Gmo Us. It trades about 0.1 of its potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.05 per unit of risk. If you would invest 2,028 in Federated Equity Income on August 29, 2024 and sell it today you would earn a total of 634.00 from holding Federated Equity Income or generate 31.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Equity Income vs. Gmo Equity Allocation
Performance |
| Timeline |
| Federated Equity Income |
| Gmo Equity Allocation |
Federated Equity and Gmo Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Gmo Us
The main advantage of trading using opposite Federated Equity and Gmo Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Gmo Us 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 Gmo Us will offset losses from the drop in Gmo Us' long position.| Federated Equity vs. Iaadx | Federated Equity vs. T Rowe Price | Federated Equity vs. Acm Dynamic Opportunity | Federated Equity vs. Fa 529 Aggressive |
| Gmo Us vs. Wisdomtree Siegel Global | Gmo Us vs. Vanguard Global Credit | Gmo Us vs. Barings Global Floating | Gmo Us vs. Nuveen Global Real |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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