Correlation Between Federated Hermes and Stone Harbor
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Stone Harbor 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 Hermes and Stone Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Conservative and Stone Harbor Local, you can compare the effects of market volatilities on Federated Hermes and Stone Harbor 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 Hermes with a short position of Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Stone Harbor.
Diversification Opportunities for Federated Hermes and Stone Harbor
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Stone is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and Stone Harbor Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor Local and Federated Hermes 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 Hermes Conservative are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor Local has no effect on the direction of Federated Hermes i.e., Federated Hermes and Stone Harbor go up and down completely randomly.
Pair Corralation between Federated Hermes and Stone Harbor
Assuming the 90 days horizon Federated Hermes Conservative is expected to generate 0.21 times more return on investment than Stone Harbor. However, Federated Hermes Conservative is 4.87 times less risky than Stone Harbor. It trades about 0.22 of its potential returns per unit of risk. Stone Harbor Local is currently generating about -0.01 per unit of risk. If you would invest 967.00 in Federated Hermes Conservative on September 3, 2024 and sell it today you would earn a total of 34.00 from holding Federated Hermes Conservative or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Conservative vs. Stone Harbor Local
Performance |
| Timeline |
| Federated Hermes Con |
| Stone Harbor Local |
Federated Hermes and Stone Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Stone Harbor
The main advantage of trading using opposite Federated Hermes and Stone Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Stone Harbor 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 Stone Harbor will offset losses from the drop in Stone Harbor's long position.| Federated Hermes vs. Alpine High Yield | Federated Hermes vs. Ppm High Yield | Federated Hermes vs. American Century High | Federated Hermes vs. Pgim High Yield |
| Stone Harbor vs. HUMANA INC | Stone Harbor vs. Aquagold International | Stone Harbor vs. Barloworld Ltd ADR | Stone Harbor vs. Morningstar Unconstrained Allocation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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