Correlation Between Federated High and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Federated High and Pacific Funds 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 Pacific Funds 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 Pacific Funds Floating, you can compare the effects of market volatilities on Federated High and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Pacific Funds.
Diversification Opportunities for Federated High and Pacific Funds
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Pacific is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Pacific Funds Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Floating 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Floating has no effect on the direction of Federated High i.e., Federated High and Pacific Funds go up and down completely randomly.
Pair Corralation between Federated High and Pacific Funds
Assuming the 90 days horizon Federated High Yield is expected to generate 1.86 times more return on investment than Pacific Funds. However, Federated High is 1.86 times more volatile than Pacific Funds Floating. It trades about 0.12 of its potential returns per unit of risk. Pacific Funds Floating is currently generating about 0.21 per unit of risk. If you would invest 534.00 in Federated High Yield on October 25, 2024 and sell it today you would earn a total of 106.00 from holding Federated High Yield or generate 19.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Pacific Funds Floating
Performance |
| Timeline |
| Federated High Yield |
| Pacific Funds Floating |
Federated High and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Pacific Funds
The main advantage of trading using opposite Federated High and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Federated High vs. Jpmorgan High Yield | Federated High vs. Lord Abbett Short | Federated High vs. T Rowe Price | Federated High vs. Voya High Yield |
| Pacific Funds vs. Intermediate Term Tax Free Bond | Pacific Funds vs. Dreyfusstandish Global Fixed | Pacific Funds vs. Versatile Bond Portfolio | Pacific Funds vs. Siit High Yield |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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