Correlation Between Federated Hermes and Global X
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes ETF and Global X Funds, you can compare the effects of market volatilities on Federated Hermes and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Global X.
Diversification Opportunities for Federated Hermes and Global X
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Global is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes ETF and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Federated Hermes i.e., Federated Hermes and Global X go up and down completely randomly.
Pair Corralation between Federated Hermes and Global X
Given the investment horizon of 90 days Federated Hermes ETF is expected to generate 1.02 times more return on investment than Global X. However, Federated Hermes is 1.02 times more volatile than Global X Funds. It trades about 0.45 of its potential returns per unit of risk. Global X Funds is currently generating about -0.17 per unit of risk. If you would invest 2,705 in Federated Hermes ETF on September 4, 2024 and sell it today you would earn a total of 204.00 from holding Federated Hermes ETF or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Federated Hermes ETF vs. Global X Funds
Performance |
| Timeline |
| Federated Hermes ETF |
| Global X Funds |
Federated Hermes and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Global X
The main advantage of trading using opposite Federated Hermes and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Federated Hermes vs. Global X Funds | Federated Hermes vs. Dell Technologies | Federated Hermes vs. Juniper Networks | Federated Hermes vs. HUMANA INC |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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