Correlation Between Federated Government and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both Federated Government and Amcap Fund 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 Amcap Fund 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 Amcap Fund Class, you can compare the effects of market volatilities on Federated Government and Amcap Fund 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 Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Amcap Fund.
Diversification Opportunities for Federated Government and Amcap Fund
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Amcap is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class 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 Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Federated Government i.e., Federated Government and Amcap Fund go up and down completely randomly.
Pair Corralation between Federated Government and Amcap Fund
Assuming the 90 days horizon Federated Government Ultrashort is expected to generate 0.13 times more return on investment than Amcap Fund. However, Federated Government Ultrashort is 7.91 times less risky than Amcap Fund. It trades about 0.25 of its potential returns per unit of risk. Amcap Fund Class is currently generating about -0.11 per unit of risk. If you would invest 972.00 in Federated Government Ultrashort on November 28, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Amcap Fund Class
Performance |
| Timeline |
| Federated Government |
| Amcap Fund Class |
Federated Government and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Amcap Fund
The main advantage of trading using opposite Federated Government and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund'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 |
| Amcap Fund vs. Barings High Yield | Amcap Fund vs. Msift High Yield | Amcap Fund vs. Pace High Yield | Amcap Fund vs. Goldman Sachs High |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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