Correlation Between Federated High and Northeast Investors
Can any of the company-specific risk be diversified away by investing in both Federated High and Northeast Investors 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 Northeast Investors 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 Northeast Investors Trust, you can compare the effects of market volatilities on Federated High and Northeast Investors 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 Northeast Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Northeast Investors.
Diversification Opportunities for Federated High and Northeast Investors
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Northeast is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Northeast Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Investors Trust 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 Northeast Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Investors Trust has no effect on the direction of Federated High i.e., Federated High and Northeast Investors go up and down completely randomly.
Pair Corralation between Federated High and Northeast Investors
Assuming the 90 days horizon Federated High Yield is expected to generate 1.06 times more return on investment than Northeast Investors. However, Federated High is 1.06 times more volatile than Northeast Investors Trust. It trades about 0.11 of its potential returns per unit of risk. Northeast Investors Trust is currently generating about 0.11 per unit of risk. If you would invest 545.00 in Federated High Yield on September 3, 2024 and sell it today you would earn a total of 101.00 from holding Federated High Yield or generate 18.53% 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. Northeast Investors Trust
Performance |
| Timeline |
| Federated High Yield |
| Northeast Investors Trust |
Federated High and Northeast Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Northeast Investors
The main advantage of trading using opposite Federated High and Northeast Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Northeast Investors 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 Northeast Investors will offset losses from the drop in Northeast Investors' long position.| Federated High vs. Eventide Healthcare Life | Federated High vs. Health Biotchnology Portfolio | Federated High vs. Alphacentric Lifesci Healthcare | Federated High vs. Blackrock Health Sciences |
| Northeast Investors vs. Vanguard High Yield Corporate | Northeast Investors vs. Vanguard High Yield Porate | Northeast Investors vs. Blackrock Hi Yld | Northeast Investors vs. Blackrock 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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