Correlation Between Federated High and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Federated High and Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial Small, you can compare the effects of market volatilities on Federated High and Mesirow Financial 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 Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Mesirow Financial.
Diversification Opportunities for Federated High and Mesirow Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and MESIROW is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small 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 Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Federated High i.e., Federated High and Mesirow Financial go up and down completely randomly.
Pair Corralation between Federated High and Mesirow Financial
Assuming the 90 days horizon Federated High is expected to generate 5.97 times less return on investment than Mesirow Financial. But when comparing it to its historical volatility, Federated High Yield is 7.53 times less risky than Mesirow Financial. It trades about 0.24 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,366 in Mesirow Financial Small on August 31, 2024 and sell it today you would earn a total of 76.00 from holding Mesirow Financial Small or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Mesirow Financial Small
Performance |
| Timeline |
| Federated High Yield |
| Mesirow Financial Small |
Federated High and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Mesirow Financial
The main advantage of trading using opposite Federated High and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.| Federated High vs. Allianzgi Technology Fund | Federated High vs. Technology Ultrasector Profund | Federated High vs. Pgim Jennison Technology | Federated High vs. Mfs Technology Fund |
| Mesirow Financial vs. Absolute Convertible Arbitrage | Mesirow Financial vs. Advent Claymore Convertible | Mesirow Financial vs. The Gamco Global | Mesirow Financial vs. Columbia Vertible Securities |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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