Correlation Between Federated Government and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Federated Government and Floating Rate 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 Floating Rate 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 Floating Rate Fund, you can compare the effects of market volatilities on Federated Government and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Floating Rate.
Diversification Opportunities for Federated Government and Floating Rate
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FEDERATED and Floating is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Federated Government i.e., Federated Government and Floating Rate go up and down completely randomly.
Pair Corralation between Federated Government and Floating Rate
Assuming the 90 days horizon Federated Government is expected to generate 1.71 times less return on investment than Floating Rate. But when comparing it to its historical volatility, Federated Government Ultrashort is 1.5 times less risky than Floating Rate. It trades about 0.22 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 811.00 in Floating Rate Fund on October 31, 2024 and sell it today you would earn a total of 6.00 from holding Floating Rate Fund or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Floating Rate Fund
Performance |
| Timeline |
| Federated Government |
| Floating Rate |
Federated Government and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Floating Rate
The main advantage of trading using opposite Federated Government and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| Federated Government vs. Artisan High Income | Federated Government vs. T Rowe Price | Federated Government vs. Lord Abbett Short | Federated Government vs. Strategic Advisers Income |
| Floating Rate vs. Retirement Living Through | Floating Rate vs. Moderate Balanced Allocation | Floating Rate vs. Putnman Retirement Ready | Floating Rate vs. Franklin Lifesmart Retirement |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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