Correlation Between Federated High and State Street
Can any of the company-specific risk be diversified away by investing in both Federated High and State Street 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 State Street 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 State Street Real, you can compare the effects of market volatilities on Federated High and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and State Street.
Diversification Opportunities for Federated High and State Street
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FEDERATED and State is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and State Street Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Real 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Real has no effect on the direction of Federated High i.e., Federated High and State Street go up and down completely randomly.
Pair Corralation between Federated High and State Street
Assuming the 90 days horizon Federated High Yield is expected to generate 0.22 times more return on investment than State Street. However, Federated High Yield is 4.62 times less risky than State Street. It trades about 0.3 of its potential returns per unit of risk. State Street Real is currently generating about 0.01 per unit of risk. If you would invest 632.00 in Federated High Yield on October 22, 2024 and sell it today you would earn a total of 8.00 from holding Federated High Yield or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. State Street Real
Performance |
| Timeline |
| Federated High Yield |
| State Street Real |
Federated High and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and State Street
The main advantage of trading using opposite Federated High and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Federated High vs. Janus High Yield Fund | Federated High vs. Northeast Investors Trust | Federated High vs. High Yield Fund Investor | Federated High vs. Ab Sustainable Thematic |
| State Street vs. Federated High Yield | State Street vs. Leader Short Term Bond | State Street vs. Alliancebernstein Bond | State Street vs. Maryland Tax Free Bond |
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.
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