Correlation Between Federated Hermes and Causeway International
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Causeway International 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 Causeway International 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 Causeway International Opportunities, you can compare the effects of market volatilities on Federated Hermes and Causeway International 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 Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Causeway International.
Diversification Opportunities for Federated Hermes and Causeway International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Causeway is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Inflation and Causeway International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International 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 Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Federated Hermes i.e., Federated Hermes and Causeway International go up and down completely randomly.
Pair Corralation between Federated Hermes and Causeway International
Assuming the 90 days horizon Federated Hermes is expected to generate 3.6 times less return on investment than Causeway International. But when comparing it to its historical volatility, Federated Hermes Inflation is 2.18 times less risky than Causeway International. It trades about 0.04 of its potential returns per unit of risk. Causeway International Opportunities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,513 in Causeway International Opportunities on September 12, 2024 and sell it today you would earn a total of 251.00 from holding Causeway International Opportunities or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Inflation vs. Causeway International Opportu
Performance |
| Timeline |
| Federated Hermes Inf |
| Causeway International |
Federated Hermes and Causeway International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Causeway International
The main advantage of trading using opposite Federated Hermes and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.| Federated Hermes vs. Ab Bond Inflation | Federated Hermes vs. Blackrock Inflation Protected | Federated Hermes vs. Arrow Managed Futures | Federated Hermes vs. Lord Abbett 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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