Correlation Between Federated High and California High-yield
Can any of the company-specific risk be diversified away by investing in both Federated High and California High-yield 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 California High-yield 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 California High Yield Municipal, you can compare the effects of market volatilities on Federated High and California High-yield 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 California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and California High-yield.
Diversification Opportunities for Federated High and California High-yield
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federated and California is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Federated High i.e., Federated High and California High-yield go up and down completely randomly.
Pair Corralation between Federated High and California High-yield
Assuming the 90 days horizon Federated High is expected to generate 1.21 times less return on investment than California High-yield. But when comparing it to its historical volatility, Federated High Yield is 1.88 times less risky than California High-yield. It trades about 0.24 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 975.00 in California High Yield Municipal on August 24, 2024 and sell it today you would earn a total of 11.00 from holding California High Yield Municipal or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. California High Yield Municipa
Performance |
| Timeline |
| Federated High Yield |
| California High Yield |
Federated High and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and California High-yield
The main advantage of trading using opposite Federated High and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, California High-yield 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 California High-yield will offset losses from the drop in California High-yield's long position.| Federated High vs. Institutional Fiduciary Trust | Federated High vs. Ashmore Emerging Markets | Federated High vs. Rbc Funds Trust | Federated High vs. Usaa Mutual Funds |
| California High-yield vs. Vanguard California Long Term | California High-yield vs. HUMANA INC | California High-yield vs. Aquagold International | California High-yield vs. Barloworld Ltd ADR |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |