Correlation Between Federated Hermes and Ocean Park
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Ocean Park 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 Hermes and Ocean Park into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes ETF and Ocean Park High, you can compare the effects of market volatilities on Federated Hermes and Ocean Park 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 Hermes with a short position of Ocean Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Ocean Park.
Diversification Opportunities for Federated Hermes and Ocean Park
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Ocean is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes ETF and Ocean Park High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Park High and Federated Hermes 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 Hermes ETF are associated (or correlated) with Ocean Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Park High has no effect on the direction of Federated Hermes i.e., Federated Hermes and Ocean Park go up and down completely randomly.
Pair Corralation between Federated Hermes and Ocean Park
Given the investment horizon of 90 days Federated Hermes is expected to generate 2.05 times less return on investment than Ocean Park. But when comparing it to its historical volatility, Federated Hermes ETF is 1.35 times less risky than Ocean Park. It trades about 0.14 of its potential returns per unit of risk. Ocean Park High is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,541 in Ocean Park High on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Ocean Park High or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federated Hermes ETF vs. Ocean Park High
Performance |
| Timeline |
| Federated Hermes ETF |
| Ocean Park High |
Federated Hermes and Ocean Park Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Ocean Park
The main advantage of trading using opposite Federated Hermes and Ocean Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Ocean Park 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 Ocean Park will offset losses from the drop in Ocean Park's long position.| Federated Hermes vs. Federated Hermes ETF | Federated Hermes vs. American Century ETF | Federated Hermes vs. Dimensional ETF Trust | Federated Hermes vs. Dimensional ETF Trust |
| Ocean Park vs. Valued Advisers Trust | Ocean Park vs. Columbia Diversified Fixed | Ocean Park vs. Principal Exchange Traded Funds | Ocean Park vs. Doubleline Etf Trust |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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