Correlation Between Federated Government and Federated
Can any of the company-specific risk be diversified away by investing in both Federated Government and Federated 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 Government and Federated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Income and Federated Gov Sec, you can compare the effects of market volatilities on Federated Government and Federated 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 Government with a short position of Federated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Federated.
Diversification Opportunities for Federated Government and Federated
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Federated is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Income and Federated Gov Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Gov Sec and Federated Government 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 Government Income are associated (or correlated) with Federated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Gov Sec has no effect on the direction of Federated Government i.e., Federated Government and Federated go up and down completely randomly.
Pair Corralation between Federated Government and Federated
Assuming the 90 days horizon Federated Government Income is expected to under-perform the Federated. In addition to that, Federated Government is 3.02 times more volatile than Federated Gov Sec. It trades about -0.1 of its total potential returns per unit of risk. Federated Gov Sec is currently generating about -0.05 per unit of volatility. If you would invest 965.00 in Federated Gov Sec on September 5, 2024 and sell it today you would lose (3.00) from holding Federated Gov Sec or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Income vs. Federated Gov Sec
Performance |
| Timeline |
| Federated Government |
| Federated Gov Sec |
Federated Government and Federated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Federated
The main advantage of trading using opposite Federated Government and Federated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Federated 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 Federated will offset losses from the drop in Federated's long position.| Federated Government vs. T Rowe Price | Federated Government vs. Victory High Income | Federated Government vs. Nuveen High Income | Federated Government vs. Western Asset High |
| Federated vs. Federated Government Income | Federated vs. Nationwide Fund Institutional | Federated vs. Federated Max Cap Index | Federated vs. The Brown Capital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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