Correlation Between Federated Government and Americafirst Defensive
Can any of the company-specific risk be diversified away by investing in both Federated Government and Americafirst Defensive 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 Government and Americafirst Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Ultrashort and Americafirst Defensive Growth, you can compare the effects of market volatilities on Federated Government and Americafirst Defensive 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 Government with a short position of Americafirst Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Americafirst Defensive.
Diversification Opportunities for Federated Government and Americafirst Defensive
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Americafirst is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Americafirst Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Defensive and Federated Government 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 Government Ultrashort are associated (or correlated) with Americafirst Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Defensive has no effect on the direction of Federated Government i.e., Federated Government and Americafirst Defensive go up and down completely randomly.
Pair Corralation between Federated Government and Americafirst Defensive
Assuming the 90 days horizon Federated Government is expected to generate 1.33 times less return on investment than Americafirst Defensive. But when comparing it to its historical volatility, Federated Government Ultrashort is 5.12 times less risky than Americafirst Defensive. It trades about 0.2 of its potential returns per unit of risk. Americafirst Defensive Growth is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 754.00 in Americafirst Defensive Growth on November 28, 2024 and sell it today you would earn a total of 101.00 from holding Americafirst Defensive Growth or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Americafirst Defensive Growth
Performance |
| Timeline |
| Federated Government |
| Americafirst Defensive |
Federated Government and Americafirst Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Americafirst Defensive
The main advantage of trading using opposite Federated Government and Americafirst Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Americafirst Defensive 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 Americafirst Defensive will offset losses from the drop in Americafirst Defensive's long position.| Federated Government vs. Calvert Short Duration | Federated Government vs. Touchstone Ultra Short | Federated Government vs. Metropolitan West Ultra | Federated Government vs. Blackrock Global Longshort |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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