Correlation Between Federated Government and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Federated Government and Pacific Funds 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 Pacific Funds 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 Pacific Funds E, you can compare the effects of market volatilities on Federated Government and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Pacific Funds.
Diversification Opportunities for Federated Government and Pacific Funds
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Pacific is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Pacific Funds E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds E 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds E has no effect on the direction of Federated Government i.e., Federated Government and Pacific Funds go up and down completely randomly.
Pair Corralation between Federated Government and Pacific Funds
Assuming the 90 days horizon Federated Government is expected to generate 7.78 times less return on investment than Pacific Funds. But when comparing it to its historical volatility, Federated Government Ultrashort is 9.27 times less risky than Pacific Funds. It trades about 0.12 of its potential returns per unit of risk. Pacific Funds E is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 966.00 in Pacific Funds E on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Pacific Funds E or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Pacific Funds E
Performance |
| Timeline |
| Federated Government |
| Pacific Funds E |
Federated Government and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Pacific Funds
The main advantage of trading using opposite Federated Government and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Federated Government vs. Federated Emerging Market | Federated Government vs. Federated Mdt All | Federated Government vs. Federated Mdt Balanced | Federated Government vs. Federated Global Allocation |
| Pacific Funds vs. Fidelity Advisor Gold | Pacific Funds vs. Sprott Gold Equity | Pacific Funds vs. Oppenheimer Gold Special | Pacific Funds vs. Vy Goldman Sachs |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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