Correlation Between Federated Government and Federated Intermediate
Can any of the company-specific risk be diversified away by investing in both Federated Government and Federated Intermediate 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 Government and Federated Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Income and Federated Intermediate Municipal, you can compare the effects of market volatilities on Federated Government and Federated Intermediate 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 Government with a short position of Federated Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Federated Intermediate.
Diversification Opportunities for Federated Government and Federated Intermediate
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Income and Federated Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Intermediate and Federated Government 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 Government Income are associated (or correlated) with Federated Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Intermediate has no effect on the direction of Federated Government i.e., Federated Government and Federated Intermediate go up and down completely randomly.
Pair Corralation between Federated Government and Federated Intermediate
Assuming the 90 days horizon Federated Government Income is expected to generate 2.76 times more return on investment than Federated Intermediate. However, Federated Government is 2.76 times more volatile than Federated Intermediate Municipal. It trades about 0.22 of its potential returns per unit of risk. Federated Intermediate Municipal is currently generating about 0.49 per unit of risk. If you would invest 881.00 in Federated Government Income on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Federated Government Income or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Income vs. Federated Intermediate Municip
Performance |
| Timeline |
| Federated Government |
| Federated Intermediate |
Federated Government and Federated Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Federated Intermediate
The main advantage of trading using opposite Federated Government and Federated Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Federated Intermediate 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 Intermediate will offset losses from the drop in Federated Intermediate's long position.| Federated Government vs. Ab Discovery Value | Federated Government vs. Pace Smallmedium Value | Federated Government vs. Victory Rs Partners | Federated Government vs. Queens Road Small |
| Federated Intermediate vs. Federated Emerging Market | Federated Intermediate vs. Federated Mdt All | Federated Intermediate vs. Federated Mdt Balanced | Federated Intermediate vs. Federated Global Allocation |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Positions Ratings 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 | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |