Correlation Between Federated Mid-cap and Nationwide Mid
Can any of the company-specific risk be diversified away by investing in both Federated Mid-cap and Nationwide Mid 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 Mid-cap and Nationwide Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Mid Cap Index and Nationwide Mid Cap, you can compare the effects of market volatilities on Federated Mid-cap and Nationwide Mid 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 Mid-cap with a short position of Nationwide Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mid-cap and Nationwide Mid.
Diversification Opportunities for Federated Mid-cap and Nationwide Mid
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Nationwide is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mid Cap Index and Nationwide Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Mid Cap and Federated Mid-cap 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 Mid Cap Index are associated (or correlated) with Nationwide Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Mid Cap has no effect on the direction of Federated Mid-cap i.e., Federated Mid-cap and Nationwide Mid go up and down completely randomly.
Pair Corralation between Federated Mid-cap and Nationwide Mid
Assuming the 90 days horizon Federated Mid Cap Index is expected to generate 0.99 times more return on investment than Nationwide Mid. However, Federated Mid Cap Index is 1.01 times less risky than Nationwide Mid. It trades about -0.24 of its potential returns per unit of risk. Nationwide Mid Cap is currently generating about -0.24 per unit of risk. If you would invest 1,602 in Federated Mid Cap Index on November 28, 2024 and sell it today you would lose (69.00) from holding Federated Mid Cap Index or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Mid Cap Index vs. Nationwide Mid Cap
Performance |
| Timeline |
| Federated Mid Cap |
| Nationwide Mid Cap |
Federated Mid-cap and Nationwide Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Mid-cap and Nationwide Mid
The main advantage of trading using opposite Federated Mid-cap and Nationwide Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mid-cap position performs unexpectedly, Nationwide Mid 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 Nationwide Mid will offset losses from the drop in Nationwide Mid's long position.| Federated Mid-cap vs. Dreyfus Smallcap Stock | Federated Mid-cap vs. Federated Mid Cap Index | Federated Mid-cap vs. Wells Fargo Growth | Federated Mid-cap vs. Dreyfus Midcap Index |
| Nationwide Mid vs. Federated Mid Cap Index | Nationwide Mid vs. Nationwide Mid Cap | Nationwide Mid vs. Nationwide Mid Cap | Nationwide Mid vs. Dreyfus Midcap Index |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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