Correlation Between Federated Government and Perkins Small
Can any of the company-specific risk be diversified away by investing in both Federated Government and Perkins Small 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 Perkins Small 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 Perkins Small Cap, you can compare the effects of market volatilities on Federated Government and Perkins Small 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 Perkins Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Perkins Small.
Diversification Opportunities for Federated Government and Perkins Small
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEDERATED and Perkins is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Perkins Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Small Cap 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 Perkins Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Small Cap has no effect on the direction of Federated Government i.e., Federated Government and Perkins Small go up and down completely randomly.
Pair Corralation between Federated Government and Perkins Small
Assuming the 90 days horizon Federated Government Ultrashort is expected to generate 0.08 times more return on investment than Perkins Small. However, Federated Government Ultrashort is 12.86 times less risky than Perkins Small. It trades about 0.2 of its potential returns per unit of risk. Perkins Small Cap is currently generating about -0.04 per unit of risk. If you would invest 952.00 in Federated Government Ultrashort on October 26, 2024 and sell it today you would earn a total of 29.00 from holding Federated Government Ultrashort or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Perkins Small Cap
Performance |
| Timeline |
| Federated Government |
| Perkins Small Cap |
Federated Government and Perkins Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Perkins Small
The main advantage of trading using opposite Federated Government and Perkins Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Perkins Small 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 Perkins Small will offset losses from the drop in Perkins Small's 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 |
| Perkins Small vs. Sterling Capital Short | Perkins Small vs. Federated Government Ultrashort | Perkins Small vs. Touchstone Ultra Short | Perkins Small vs. Siit Ultra Short |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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