Correlation Between Federated Government and Wilmington Global
Can any of the company-specific risk be diversified away by investing in both Federated Government and Wilmington Global 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 Wilmington Global 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 Wilmington Global Alpha, you can compare the effects of market volatilities on Federated Government and Wilmington Global 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 Wilmington Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Wilmington Global.
Diversification Opportunities for Federated Government and Wilmington Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Wilmington is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Wilmington Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Global Alpha 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 Wilmington Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Global Alpha has no effect on the direction of Federated Government i.e., Federated Government and Wilmington Global go up and down completely randomly.
Pair Corralation between Federated Government and Wilmington Global
Assuming the 90 days horizon Federated Government is expected to generate 1.41 times less return on investment than Wilmington Global. But when comparing it to its historical volatility, Federated Government Ultrashort is 2.99 times less risky than Wilmington Global. It trades about 0.25 of its potential returns per unit of risk. Wilmington Global Alpha is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,323 in Wilmington Global Alpha on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Wilmington Global Alpha or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Wilmington Global Alpha
Performance |
| Timeline |
| Federated Government |
| Wilmington Global Alpha |
Federated Government and Wilmington Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Wilmington Global
The main advantage of trading using opposite Federated Government and Wilmington Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Wilmington Global 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 Wilmington Global will offset losses from the drop in Wilmington Global'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 |
| Wilmington Global vs. Dunham Porategovernment Bond | Wilmington Global vs. Federated Government Ultrashort | Wilmington Global vs. Us Government Securities | Wilmington Global vs. Prudential Government Income |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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