Correlation Between Federated High and Health Care
Can any of the company-specific risk be diversified away by investing in both Federated High and Health Care 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 Health Care 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 Health Care Fund, you can compare the effects of market volatilities on Federated High and Health Care 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 Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Health Care.
Diversification Opportunities for Federated High and Health Care
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and HEALTH is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund 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 Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Federated High i.e., Federated High and Health Care go up and down completely randomly.
Pair Corralation between Federated High and Health Care
Assuming the 90 days horizon Federated High is expected to generate 2.38 times less return on investment than Health Care. But when comparing it to its historical volatility, Federated High Yield is 3.01 times less risky than Health Care. It trades about 0.26 of its potential returns per unit of risk. Health Care Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,904 in Health Care Fund on October 25, 2024 and sell it today you would earn a total of 87.00 from holding Health Care Fund or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Health Care Fund
Performance |
| Timeline |
| Federated High Yield |
| Health Care Fund |
Federated High and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Health Care
The main advantage of trading using opposite Federated High and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's 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 |
| Health Care vs. T Rowe Price | Health Care vs. Transamerica High Yield | Health Care vs. Federated High Yield | Health Care vs. Buffalo 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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