Correlation Between Federated Government and Global Gold
Can any of the company-specific risk be diversified away by investing in both Federated Government and Global Gold 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 Global Gold 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 Global Gold Fund, you can compare the effects of market volatilities on Federated Government and Global Gold 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 Global Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Global Gold.
Diversification Opportunities for Federated Government and Global Gold
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federated and Global is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Global Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Gold Fund 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 Global Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Gold Fund has no effect on the direction of Federated Government i.e., Federated Government and Global Gold go up and down completely randomly.
Pair Corralation between Federated Government and Global Gold
Assuming the 90 days horizon Federated Government Ultrashort is not expected to generate positive returns. However, Federated Government Ultrashort is 37.62 times less risky than Global Gold. It waists most of its returns potential to compensate for thr risk taken. Global Gold is generating about 0.48 per unit of risk. If you would invest 1,193 in Global Gold Fund on November 6, 2024 and sell it today you would earn a total of 144.00 from holding Global Gold Fund or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Global Gold Fund
Performance |
| Timeline |
| Federated Government |
| Global Gold Fund |
Federated Government and Global Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Global Gold
The main advantage of trading using opposite Federated Government and Global Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Global Gold 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 Global Gold will offset losses from the drop in Global Gold's long position.| Federated Government vs. Buffalo High Yield | Federated Government vs. T Rowe Price | Federated Government vs. Prudential High Yield | Federated Government vs. Dunham High Yield |
| Global Gold vs. Massmutual Premier High | Global Gold vs. T Rowe Price | Global Gold vs. Artisan High Income | Global Gold vs. Pace High Yield |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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