Correlation Between Federated High and Federated Mdt

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Can any of the company-specific risk be diversified away by investing in both Federated High and Federated Mdt 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 Mdt 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 Mdt Mid Cap, you can compare the effects of market volatilities on Federated High and Federated Mdt 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 Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Federated Mdt.

Diversification Opportunities for Federated High and Federated Mdt

FederatedFederatedDiversified AwayFederatedFederatedDiversified Away100%
0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Federated and Federated is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Income and Federated Mdt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Mid 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 Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Mid has no effect on the direction of Federated High i.e., Federated High and Federated Mdt go up and down completely randomly.

Pair Corralation between Federated High and Federated Mdt

Assuming the 90 days horizon Federated High is expected to generate 2.5 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Federated High Income is 4.3 times less risky than Federated Mdt. It trades about 0.14 of its potential returns per unit of risk. Federated Mdt Mid Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,872  in Federated Mdt Mid Cap on December 4, 2024 and sell it today you would earn a total of  1,752  from holding Federated Mdt Mid Cap or generate 45.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Federated High Income  vs.  Federated Mdt Mid Cap

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-8-6-4-202
JavaScript chart by amCharts 3.21.15FHBRX FGSAX
       Timeline  
Federated High Income 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Federated High Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar6.76.726.746.766.786.86.82
Federated Mdt Mid 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Federated Mdt Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar575859606162636465

Federated High and Federated Mdt Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.43-0.23-0.0858-0.044-0.0022930.03670.08260.220.420.62 2468101214
JavaScript chart by amCharts 3.21.15FHBRX FGSAX
       Returns  

Pair Trading with Federated High and Federated Mdt

The main advantage of trading using opposite Federated High and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.
The idea behind Federated High Income and Federated Mdt Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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