Correlation Between Federated Equity and Pace Large
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Pace Large 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 Pace Large 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 Pace Large Value, you can compare the effects of market volatilities on Federated Equity and Pace Large 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 Pace Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Pace Large.
Diversification Opportunities for Federated Equity and Pace Large
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FEDERATED and Pace is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Pace Large Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Value 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 Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Value has no effect on the direction of Federated Equity i.e., Federated Equity and Pace Large go up and down completely randomly.
Pair Corralation between Federated Equity and Pace Large
Assuming the 90 days horizon Federated Equity Income is expected to generate 1.11 times more return on investment than Pace Large. However, Federated Equity is 1.11 times more volatile than Pace Large Value. It trades about 0.21 of its potential returns per unit of risk. Pace Large Value is currently generating about 0.07 per unit of risk. If you would invest 2,566 in Federated Equity Income on August 28, 2024 and sell it today you would earn a total of 97.00 from holding Federated Equity Income or generate 3.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Equity Income vs. Pace Large Value
Performance |
| Timeline |
| Federated Equity Income |
| Pace Large Value |
Federated Equity and Pace Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Pace Large
The main advantage of trading using opposite Federated Equity and Pace Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Pace Large 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 Pace Large will offset losses from the drop in Pace Large's long position.| Federated Equity vs. Federated Emerging Market | Federated Equity vs. Federated Mdt All | Federated Equity vs. Federated Global Allocation | Federated Equity vs. Federated Hermes Emerging |
| Pace Large vs. Versatile Bond Portfolio | Pace Large vs. Morningstar Defensive Bond | Pace Large vs. Franklin High Yield | Pace Large vs. T Rowe Price |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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