Correlation Between Federated Hermes and Government Bond
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Government Bond 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 Hermes and Government Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Inflation and Government Bond Fund, you can compare the effects of market volatilities on Federated Hermes and Government Bond 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 Hermes with a short position of Government Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Government Bond.
Diversification Opportunities for Federated Hermes and Government Bond
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Government is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Inflation and Government Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Bond and Federated Hermes 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 Hermes Inflation are associated (or correlated) with Government Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Bond has no effect on the direction of Federated Hermes i.e., Federated Hermes and Government Bond go up and down completely randomly.
Pair Corralation between Federated Hermes and Government Bond
Assuming the 90 days horizon Federated Hermes Inflation is expected to generate 0.86 times more return on investment than Government Bond. However, Federated Hermes Inflation is 1.17 times less risky than Government Bond. It trades about 0.03 of its potential returns per unit of risk. Government Bond Fund is currently generating about 0.03 per unit of risk. If you would invest 934.00 in Federated Hermes Inflation on September 14, 2024 and sell it today you would earn a total of 54.00 from holding Federated Hermes Inflation or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Inflation vs. Government Bond Fund
Performance |
| Timeline |
| Federated Hermes Inf |
| Government Bond |
Federated Hermes and Government Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Government Bond
The main advantage of trading using opposite Federated Hermes and Government Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Government Bond 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 Government Bond will offset losses from the drop in Government Bond's long position.| Federated Hermes vs. Commodities Strategy Fund | Federated Hermes vs. Eic Value Fund | Federated Hermes vs. T Rowe Price | Federated Hermes vs. Rbb Fund |
| Government Bond vs. Simt Multi Asset Inflation | Government Bond vs. Goldman Sachs Inflation | Government Bond vs. Federated Hermes Inflation | Government Bond vs. Ab Bond Inflation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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