Correlation Between Federated Equity and Locorr Dynamic
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Locorr Dynamic 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 Locorr Dynamic 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 Locorr Dynamic Equity, you can compare the effects of market volatilities on Federated Equity and Locorr Dynamic 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 Locorr Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Locorr Dynamic.
Diversification Opportunities for Federated Equity and Locorr Dynamic
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FEDERATED and Locorr is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Locorr Dynamic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Dynamic 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 Locorr Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Dynamic Equity has no effect on the direction of Federated Equity i.e., Federated Equity and Locorr Dynamic go up and down completely randomly.
Pair Corralation between Federated Equity and Locorr Dynamic
Assuming the 90 days horizon Federated Equity Income is expected to generate 1.45 times more return on investment than Locorr Dynamic. However, Federated Equity is 1.45 times more volatile than Locorr Dynamic Equity. It trades about 0.05 of its potential returns per unit of risk. Locorr Dynamic Equity is currently generating about 0.04 per unit of risk. If you would invest 2,197 in Federated Equity Income on August 24, 2024 and sell it today you would earn a total of 452.00 from holding Federated Equity Income or generate 20.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federated Equity Income vs. Locorr Dynamic Equity
Performance |
| Timeline |
| Federated Equity Income |
| Locorr Dynamic Equity |
Federated Equity and Locorr Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Locorr Dynamic
The main advantage of trading using opposite Federated Equity and Locorr Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Locorr Dynamic 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 Locorr Dynamic will offset losses from the drop in Locorr Dynamic's long position.| Federated Equity vs. Pimco Diversified Income | Federated Equity vs. Western Asset Diversified | Federated Equity vs. Lord Abbett Diversified | Federated Equity vs. Fidelity Advisor Diversified |
| Locorr Dynamic vs. Cref Money Market | Locorr Dynamic vs. Massmutual Premier Funds | Locorr Dynamic vs. Ashmore Emerging Markets | Locorr Dynamic vs. Dreyfus Institutional Reserves |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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