Correlation Between Federated High and Conservative Balanced
Can any of the company-specific risk be diversified away by investing in both Federated High and Conservative Balanced 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 High and Conservative Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated High Yield and Conservative Balanced Allocation, you can compare the effects of market volatilities on Federated High and Conservative Balanced 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 High with a short position of Conservative Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Conservative Balanced.
Diversification Opportunities for Federated High and Conservative Balanced
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Federated and Conservative is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Conservative Balanced Allocati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conservative Balanced and Federated High 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 High Yield are associated (or correlated) with Conservative Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conservative Balanced has no effect on the direction of Federated High i.e., Federated High and Conservative Balanced go up and down completely randomly.
Pair Corralation between Federated High and Conservative Balanced
Assuming the 90 days horizon Federated High is expected to generate 2.54 times less return on investment than Conservative Balanced. But when comparing it to its historical volatility, Federated High Yield is 2.01 times less risky than Conservative Balanced. It trades about 0.11 of its potential returns per unit of risk. Conservative Balanced Allocation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,117 in Conservative Balanced Allocation on November 7, 2024 and sell it today you would earn a total of 14.00 from holding Conservative Balanced Allocation or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Federated High Yield vs. Conservative Balanced Allocati
Performance |
| Timeline |
| Federated High Yield |
| Conservative Balanced |
Federated High and Conservative Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Conservative Balanced
The main advantage of trading using opposite Federated High and Conservative Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Conservative Balanced 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 Conservative Balanced will offset losses from the drop in Conservative Balanced's long position.| Federated High vs. Federated Emerging Market | Federated High vs. Federated Mdt All | Federated High vs. Federated Mdt Balanced | Federated High vs. Federated Global Allocation |
| Conservative Balanced vs. Nuveen Core Equity | Conservative Balanced vs. Gmo Global Equity | Conservative Balanced vs. Transamerica International Equity | Conservative Balanced vs. Doubleline Core Fixed |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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