Correlation Between Federated Hermes and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Smallcap World 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 Smallcap World 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 Smallcap World Fund, you can compare the effects of market volatilities on Federated Hermes and Smallcap World 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 Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Smallcap World.
Diversification Opportunities for Federated Hermes and Smallcap World
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Smallcap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Sdg and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World 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 Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Federated Hermes i.e., Federated Hermes and Smallcap World go up and down completely randomly.
Pair Corralation between Federated Hermes and Smallcap World
Assuming the 90 days horizon Federated Hermes is expected to generate 1.08 times less return on investment than Smallcap World. In addition to that, Federated Hermes is 1.0 times more volatile than Smallcap World Fund. It trades about 0.03 of its total potential returns per unit of risk. Smallcap World Fund is currently generating about 0.04 per unit of volatility. If you would invest 5,847 in Smallcap World Fund on October 9, 2024 and sell it today you would earn a total of 855.00 from holding Smallcap World Fund or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Sdg vs. Smallcap World Fund
Performance |
| Timeline |
| Federated Hermes Sdg |
| Smallcap World |
Federated Hermes and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Smallcap World
The main advantage of trading using opposite Federated Hermes and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World'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 |
| Smallcap World vs. New World Fund | Smallcap World vs. Washington Mutual Investors | Smallcap World vs. Europacific Growth Fund | Smallcap World vs. New Perspective Fund |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |