Correlation Between American Funds and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both American Funds and Federated Strategic 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 American Funds and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Federated Strategic Value, you can compare the effects of market volatilities on American Funds and Federated Strategic 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 American Funds with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Federated Strategic.
Diversification Opportunities for American Funds and Federated Strategic
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Federated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value and American Funds 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 American Funds American are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of American Funds i.e., American Funds and Federated Strategic go up and down completely randomly.
Pair Corralation between American Funds and Federated Strategic
Assuming the 90 days horizon American Funds American is expected to generate 0.7 times more return on investment than Federated Strategic. However, American Funds American is 1.44 times less risky than Federated Strategic. It trades about -0.13 of its potential returns per unit of risk. Federated Strategic Value is currently generating about -0.31 per unit of risk. If you would invest 6,015 in American Funds American on September 12, 2024 and sell it today you would lose (77.00) from holding American Funds American or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds American vs. Federated Strategic Value
Performance |
| Timeline |
| American Funds American |
| Federated Strategic Value |
American Funds and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Federated Strategic
The main advantage of trading using opposite American Funds and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| American Funds vs. Century Small Cap | American Funds vs. Ab Value Fund | American Funds vs. Volumetric Fund Volumetric | American Funds vs. T Rowe Price |
| Federated Strategic vs. Vanguard Value Index | Federated Strategic vs. Dodge Cox Stock | Federated Strategic vs. American Mutual Fund | Federated Strategic vs. American Funds American |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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