Correlation Between Federated High and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Federated High and Federated Hermes 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 High and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Income and Federated Hermes Conservative, you can compare the effects of market volatilities on Federated High and Federated Hermes 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 High with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Federated Hermes.
Diversification Opportunities for Federated High and Federated Hermes
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Federated is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Income and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con and Federated High 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 High Income are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Federated High i.e., Federated High and Federated Hermes go up and down completely randomly.
Pair Corralation between Federated High and Federated Hermes
Assuming the 90 days horizon Federated High Income is expected to generate 4.65 times more return on investment than Federated Hermes. However, Federated High is 4.65 times more volatile than Federated Hermes Conservative. It trades about 0.13 of its potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.22 per unit of risk. If you would invest 647.00 in Federated High Income on September 3, 2024 and sell it today you would earn a total of 14.00 from holding Federated High Income or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 7.47% |
| Values | Daily Returns |
Federated High Income vs. Federated Hermes Conservative
Performance |
| Timeline |
| Federated High Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Federated Hermes Con |
Federated High and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Federated Hermes
The main advantage of trading using opposite Federated High and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Federated High vs. Federated Hermes Mdt | Federated High vs. Federated Mdt Large | Federated High vs. Federated High Income | Federated High vs. Federated Hermes Conservative |
| Federated Hermes vs. Alpine High Yield | Federated Hermes vs. Ppm High Yield | Federated Hermes vs. American Century High | Federated Hermes vs. Pgim 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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