Correlation Between Federated Hermes and Federated High
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated High 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 Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Sdg and Federated High Income, you can compare the effects of market volatilities on Federated Hermes and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated High.
Diversification Opportunities for Federated Hermes and Federated High
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Sdg and Federated High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Income 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 Sdg are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Income has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated High go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated High
Assuming the 90 days horizon Federated Hermes Sdg is expected to generate 3.13 times more return on investment than Federated High. However, Federated Hermes is 3.13 times more volatile than Federated High Income. It trades about 0.05 of its potential returns per unit of risk. Federated High Income is currently generating about 0.11 per unit of risk. If you would invest 1,191 in Federated Hermes Sdg on September 3, 2024 and sell it today you would earn a total of 269.00 from holding Federated Hermes Sdg or generate 22.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Sdg vs. Federated High Income
Performance |
| Timeline |
| Federated Hermes Sdg |
| Federated High Income |
Federated Hermes and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated High
The main advantage of trading using opposite Federated Hermes and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated High 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 High will offset losses from the drop in Federated High's long position.| Federated Hermes vs. Issachar Fund Class | Federated Hermes vs. Fm Investments Large | Federated Hermes vs. T Rowe Price | Federated Hermes vs. William Blair Large |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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