Correlation Between Federated Hermes and American Beacon
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and American Beacon 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 American Beacon 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 American Beacon Shapiro, you can compare the effects of market volatilities on Federated Hermes and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and American Beacon.
Diversification Opportunities for Federated Hermes and American Beacon
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and American is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Conservative and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Federated Hermes i.e., Federated Hermes and American Beacon go up and down completely randomly.
Pair Corralation between Federated Hermes and American Beacon
Assuming the 90 days horizon Federated Hermes Conservative is expected to generate 0.08 times more return on investment than American Beacon. However, Federated Hermes Conservative is 12.58 times less risky than American Beacon. It trades about 0.16 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.0 per unit of risk. If you would invest 997.00 in Federated Hermes Conservative on September 13, 2024 and sell it today you would earn a total of 4.00 from holding Federated Hermes Conservative or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Federated Hermes Conservative vs. American Beacon Shapiro
Performance |
| Timeline |
| Federated Hermes Con |
| American Beacon Shapiro |
Federated Hermes and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and American Beacon
The main advantage of trading using opposite Federated Hermes and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Federated Hermes vs. Federated Emerging Market | Federated Hermes vs. Federated Mdt All | Federated Hermes vs. Federated Mdt Balanced | Federated Hermes vs. Federated Global Allocation |
| American Beacon vs. Enhanced Large Pany | American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price | American Beacon vs. Pace Large Growth |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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