Correlation Between Federated Hermes and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Pennsylvania 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 Pennsylvania 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 Pennsylvania Municipal, you can compare the effects of market volatilities on Federated Hermes and Federated Pennsylvania 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 Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Pennsylvania.
Diversification Opportunities for Federated Hermes and Federated Pennsylvania
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Sdg and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania 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 Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Pennsylvania
Assuming the 90 days horizon Federated Hermes Sdg is expected to under-perform the Federated Pennsylvania. In addition to that, Federated Hermes is 4.17 times more volatile than Federated Pennsylvania Municipal. It trades about -0.34 of its total potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about -0.31 per unit of volatility. If you would invest 1,017 in Federated Pennsylvania Municipal on October 9, 2024 and sell it today you would lose (15.00) from holding Federated Pennsylvania Municipal or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Sdg vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Federated Hermes Sdg |
| Federated Pennsylvania |
Federated Hermes and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Pennsylvania
The main advantage of trading using opposite Federated Hermes and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Pennsylvania 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 Pennsylvania will offset losses from the drop in Federated Pennsylvania's long position.| Federated Hermes vs. Icon Financial Fund | Federated Hermes vs. Prudential Financial Services | Federated Hermes vs. Blackstone Secured Lending | Federated Hermes vs. Rmb Mendon Financial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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