Correlation Between Federated Equity and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners Fund, you can compare the effects of market volatilities on Federated Equity and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Longleaf Partners.
Diversification Opportunities for Federated Equity and Longleaf Partners
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Longleaf is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Federated Equity i.e., Federated Equity and Longleaf Partners go up and down completely randomly.
Pair Corralation between Federated Equity and Longleaf Partners
Assuming the 90 days horizon Federated Equity Income is expected to generate 1.21 times more return on investment than Longleaf Partners. However, Federated Equity is 1.21 times more volatile than Longleaf Partners Fund. It trades about 0.22 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.06 per unit of risk. If you would invest 2,549 in Federated Equity Income on August 30, 2024 and sell it today you would earn a total of 106.00 from holding Federated Equity Income or generate 4.16% 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. Longleaf Partners Fund
Performance |
| Timeline |
| Federated Equity Income |
| Longleaf Partners |
Federated Equity and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Longleaf Partners
The main advantage of trading using opposite Federated Equity and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' long position.| Federated Equity vs. Ambrus Core Bond | Federated Equity vs. T Rowe Price | Federated Equity vs. Touchstone Ohio Tax | Federated Equity vs. Rbc Bluebay Global |
| Longleaf Partners vs. Versatile Bond Portfolio | Longleaf Partners vs. California Bond Fund | Longleaf Partners vs. Barings Active Short | Longleaf Partners vs. Astor Longshort Fund |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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