Correlation Between Federated Institutional and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Federated Institutional and Cohen Steers 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 Institutional and Cohen Steers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Institutional High and Cohen Steers International, you can compare the effects of market volatilities on Federated Institutional and Cohen Steers 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 Institutional with a short position of Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Cohen Steers.
Diversification Opportunities for Federated Institutional and Cohen Steers
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Cohen is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High and Cohen Steers International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Interna and Federated Institutional 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 Institutional High are associated (or correlated) with Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Interna has no effect on the direction of Federated Institutional i.e., Federated Institutional and Cohen Steers go up and down completely randomly.
Pair Corralation between Federated Institutional and Cohen Steers
Assuming the 90 days horizon Federated Institutional High is expected to generate 0.31 times more return on investment than Cohen Steers. However, Federated Institutional High is 3.2 times less risky than Cohen Steers. It trades about 0.11 of its potential returns per unit of risk. Cohen Steers International is currently generating about -0.01 per unit of risk. If you would invest 772.00 in Federated Institutional High on September 3, 2024 and sell it today you would earn a total of 123.00 from holding Federated Institutional High or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Cohen Steers International
Performance |
| Timeline |
| Federated Institutional |
| Cohen Steers Interna |
Federated Institutional and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Institutional and Cohen Steers
The main advantage of trading using opposite Federated Institutional and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.The idea behind Federated Institutional High and Cohen Steers International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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