Correlation Between Federated Government and Diversified International
Can any of the company-specific risk be diversified away by investing in both Federated Government and Diversified International 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 Diversified International 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 Diversified International Fund, you can compare the effects of market volatilities on Federated Government and Diversified International 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 Diversified International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Diversified International.
Diversification Opportunities for Federated Government and Diversified International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEDERATED and Diversified is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Diversified International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified International 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 Diversified International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified International has no effect on the direction of Federated Government i.e., Federated Government and Diversified International go up and down completely randomly.
Pair Corralation between Federated Government and Diversified International
Assuming the 90 days horizon Federated Government Ultrashort is expected to generate 0.13 times more return on investment than Diversified International. However, Federated Government Ultrashort is 7.98 times less risky than Diversified International. It trades about 0.25 of its potential returns per unit of risk. Diversified International Fund is currently generating about -0.19 per unit of risk. If you would invest 972.00 in Federated Government Ultrashort on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Federated Government Ultrashort or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Diversified International Fund
Performance |
| Timeline |
| Federated Government |
| Diversified International |
Federated Government and Diversified International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Diversified International
The main advantage of trading using opposite Federated Government and Diversified International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Diversified International 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 Diversified International will offset losses from the drop in Diversified International's long position.| Federated Government vs. Short Term Fund R | Federated Government vs. Putnam Ultra Short | Federated Government vs. HUMANA INC | Federated Government vs. Aquagold International |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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