Correlation Between Federated Institutional and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both Federated Institutional and Loomis Sayles 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 Loomis Sayles 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 Loomis Sayles Strategic, you can compare the effects of market volatilities on Federated Institutional and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Loomis Sayles.
Diversification Opportunities for Federated Institutional and Loomis Sayles
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Loomis is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High and Loomis Sayles Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Strategic 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Strategic has no effect on the direction of Federated Institutional i.e., Federated Institutional and Loomis Sayles go up and down completely randomly.
Pair Corralation between Federated Institutional and Loomis Sayles
Assuming the 90 days horizon Federated Institutional High is expected to generate 0.72 times more return on investment than Loomis Sayles. However, Federated Institutional High is 1.4 times less risky than Loomis Sayles. It trades about 0.14 of its potential returns per unit of risk. Loomis Sayles Strategic is currently generating about 0.1 per unit of risk. If you would invest 780.00 in Federated Institutional High on September 12, 2024 and sell it today you would earn a total of 117.00 from holding Federated Institutional High or generate 15.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Loomis Sayles Strategic
Performance |
| Timeline |
| Federated Institutional |
| Loomis Sayles Strategic |
Federated Institutional and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Institutional and Loomis Sayles
The main advantage of trading using opposite Federated Institutional and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' long position.The idea behind Federated Institutional High and Loomis Sayles Strategic 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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