Correlation Between Federated Intermediate and Federated Gov
Can any of the company-specific risk be diversified away by investing in both Federated Intermediate and Federated Gov 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 Intermediate and Federated Gov into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Intermediate Municipal and Federated Gov Sec, you can compare the effects of market volatilities on Federated Intermediate and Federated Gov 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 Intermediate with a short position of Federated Gov. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Intermediate and Federated Gov.
Diversification Opportunities for Federated Intermediate and Federated Gov
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federated Intermediate Municip 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 Intermediate 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 Intermediate Municipal are associated (or correlated) with Federated Gov. 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 Intermediate i.e., Federated Intermediate and Federated Gov go up and down completely randomly.
Pair Corralation between Federated Intermediate and Federated Gov
Assuming the 90 days horizon Federated Intermediate Municipal is expected to generate 1.31 times more return on investment than Federated Gov. However, Federated Intermediate is 1.31 times more volatile than Federated Gov Sec. It trades about 0.49 of its potential returns per unit of risk. Federated Gov Sec is currently generating about 0.22 per unit of risk. If you would invest 970.00 in Federated Intermediate Municipal on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Federated Intermediate Municipal or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Intermediate Municip vs. Federated Gov Sec
Performance |
| Timeline |
| Federated Intermediate |
| Federated Gov Sec |
Federated Intermediate and Federated Gov Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Intermediate and Federated Gov
The main advantage of trading using opposite Federated Intermediate and Federated Gov positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Intermediate position performs unexpectedly, Federated Gov 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 Gov will offset losses from the drop in Federated Gov's long position.| Federated Intermediate vs. Federated Emerging Market | Federated Intermediate vs. Federated Mdt All | Federated Intermediate vs. Federated Mdt Balanced | Federated Intermediate vs. Federated Global Allocation |
| Federated Gov vs. Federated U S | Federated Gov vs. Federated Mdt Large | Federated Gov vs. Federated Total Return | Federated Gov vs. Federated Max Cap Index |
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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