Correlation Between Federated Investors and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Federated Investors and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Federated Investors and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Investors and Dow Jones.
Diversification Opportunities for Federated Investors and Dow Jones
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Federated Investors B and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Federated Investors i.e., Federated Investors and Dow Jones go up and down completely randomly.
Pair Corralation between Federated Investors and Dow Jones
Considering the 90-day investment horizon Federated Investors B is expected to generate 1.57 times more return on investment than Dow Jones. However, Federated Investors is 1.57 times more volatile than Dow Jones Industrial. It trades about 0.2 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 3,210 in Federated Investors B on August 28, 2024 and sell it today you would earn a total of 1,076 from holding Federated Investors B or generate 33.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Investors B vs. Dow Jones Industrial
Performance |
| Timeline |
Federated Investors and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Federated Investors B
Pair trading matchups for Federated Investors
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Federated Investors and Dow Jones
The main advantage of trading using opposite Federated Investors and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Investors position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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