Correlation Between Federated Hermes and Federated Total

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

Diversification Opportunities for Federated Hermes and Federated Total

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Federated and Federated is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Sdg and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Total go up and down completely randomly.

Pair Corralation between Federated Hermes and Federated Total

Assuming the 90 days horizon Federated Hermes Sdg is expected to generate 2.42 times more return on investment than Federated Total. However, Federated Hermes is 2.42 times more volatile than Federated Total Return. It trades about 0.09 of its potential returns per unit of risk. Federated Total Return is currently generating about 0.12 per unit of risk. If you would invest  1,450  in Federated Hermes Sdg on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Federated Hermes Sdg or generate 1.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Federated Hermes Sdg  vs.  Federated Total Return

 Performance 
       Timeline  
Federated Hermes Sdg 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Sdg are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Federated Total Return 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Federated Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Federated Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Hermes and Federated Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Federated Hermes and Federated Total

The main advantage of trading using opposite Federated Hermes and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Total 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 Total will offset losses from the drop in Federated Total's long position.
The idea behind Federated Hermes Sdg and Federated Total Return 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.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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