Correlation Between Federated Investors and Bridge Investment
Can any of the company-specific risk be diversified away by investing in both Federated Investors and Bridge Investment 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 Investors and Bridge Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Investors B and Bridge Investment Group, you can compare the effects of market volatilities on Federated Investors and Bridge Investment 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 Investors with a short position of Bridge Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Investors and Bridge Investment.
Diversification Opportunities for Federated Investors and Bridge Investment
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federated and Bridge is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Federated Investors B and Bridge Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Investment and Federated Investors 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 Investors B are associated (or correlated) with Bridge Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Investment has no effect on the direction of Federated Investors i.e., Federated Investors and Bridge Investment go up and down completely randomly.
Pair Corralation between Federated Investors and Bridge Investment
Considering the 90-day investment horizon Federated Investors B is expected to generate 0.51 times more return on investment than Bridge Investment. However, Federated Investors B is 1.97 times less risky than Bridge Investment. It trades about 0.3 of its potential returns per unit of risk. Bridge Investment Group is currently generating about 0.08 per unit of risk. If you would invest 3,401 in Federated Investors B on September 12, 2024 and sell it today you would earn a total of 832.00 from holding Federated Investors B or generate 24.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Investors B vs. Bridge Investment Group
Performance |
| Timeline |
| Federated Investors |
| Bridge Investment |
Federated Investors and Bridge Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Investors and Bridge Investment
The main advantage of trading using opposite Federated Investors and Bridge Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Investors position performs unexpectedly, Bridge Investment 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 Bridge Investment will offset losses from the drop in Bridge Investment's long position.| Federated Investors vs. Federated Premier Municipal | Federated Investors vs. Blackrock Muniyield | Federated Investors vs. Diamond Hill Investment | Federated Investors vs. NXG NextGen Infrastructure |
| Bridge Investment vs. Gladstone Investment | Bridge Investment vs. Horizon Technology Finance | Bridge Investment vs. Stellus Capital Investment | Bridge Investment vs. Prospect Capital |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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