Correlation Between Federated Kaufmann and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann and Federated Strategic 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 Kaufmann and Federated Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Small and Federated Strategic Value, you can compare the effects of market volatilities on Federated Kaufmann and Federated Strategic 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 Kaufmann with a short position of Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Federated Strategic.
Diversification Opportunities for Federated Kaufmann and Federated Strategic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Small and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value and Federated Kaufmann 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 Kaufmann Small are associated (or correlated) with Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of Federated Kaufmann i.e., Federated Kaufmann and Federated Strategic go up and down completely randomly.
Pair Corralation between Federated Kaufmann and Federated Strategic
Assuming the 90 days horizon Federated Kaufmann Small is expected to generate 2.26 times more return on investment than Federated Strategic. However, Federated Kaufmann is 2.26 times more volatile than Federated Strategic Value. It trades about 0.24 of its potential returns per unit of risk. Federated Strategic Value is currently generating about 0.16 per unit of risk. If you would invest 5,235 in Federated Kaufmann Small on August 26, 2024 and sell it today you would earn a total of 348.00 from holding Federated Kaufmann Small or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Kaufmann Small vs. Federated Strategic Value
Performance |
| Timeline |
| Federated Kaufmann Small |
| Federated Strategic Value |
Federated Kaufmann and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Kaufmann and Federated Strategic
The main advantage of trading using opposite Federated Kaufmann and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.| Federated Kaufmann vs. Federated Emerging Market | Federated Kaufmann vs. Federated Mdt All | Federated Kaufmann vs. Federated Mdt Balanced | Federated Kaufmann 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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