Correlation Between Federated High and Westcore Plus
Can any of the company-specific risk be diversified away by investing in both Federated High and Westcore Plus 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 Westcore Plus 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 Westcore Plus Bond, you can compare the effects of market volatilities on Federated High and Westcore Plus 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 Westcore Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated High and Westcore Plus.
Diversification Opportunities for Federated High and Westcore Plus
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and WESTCORE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Federated High Yield and Westcore Plus Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Plus Bond 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 Westcore Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Plus Bond has no effect on the direction of Federated High i.e., Federated High and Westcore Plus go up and down completely randomly.
Pair Corralation between Federated High and Westcore Plus
Assuming the 90 days horizon Federated High Yield is expected to generate 0.84 times more return on investment than Westcore Plus. However, Federated High Yield is 1.19 times less risky than Westcore Plus. It trades about 0.1 of its potential returns per unit of risk. Westcore Plus Bond is currently generating about 0.05 per unit of risk. If you would invest 546.00 in Federated High Yield on September 3, 2024 and sell it today you would earn a total of 98.00 from holding Federated High Yield or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated High Yield vs. Westcore Plus Bond
Performance |
| Timeline |
| Federated High Yield |
| Westcore Plus Bond |
Federated High and Westcore Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated High and Westcore Plus
The main advantage of trading using opposite Federated High and Westcore Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated High position performs unexpectedly, Westcore Plus 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 Westcore Plus will offset losses from the drop in Westcore Plus' 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 |
| Westcore Plus vs. Large Cap Fund | Westcore Plus vs. James Balanced Golden | Westcore Plus vs. Aberdeen Global High | Westcore Plus vs. Loomis Sayles 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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