Correlation Between Federated Premier and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Federated Premier and Ares Capital 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 Premier and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and Ares Capital, you can compare the effects of market volatilities on Federated Premier and Ares Capital 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 Premier with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Ares Capital.
Diversification Opportunities for Federated Premier and Ares Capital
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Ares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Federated Premier 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 Premier Municipal are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Federated Premier i.e., Federated Premier and Ares Capital go up and down completely randomly.
Pair Corralation between Federated Premier and Ares Capital
Considering the 90-day investment horizon Federated Premier is expected to generate 4.78 times less return on investment than Ares Capital. But when comparing it to its historical volatility, Federated Premier Municipal is 1.39 times less risky than Ares Capital. It trades about 0.03 of its potential returns per unit of risk. Ares Capital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,623 in Ares Capital on October 25, 2024 and sell it today you would earn a total of 715.00 from holding Ares Capital or generate 44.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Federated Premier Municipal vs. Ares Capital
Performance |
| Timeline |
| Federated Premier |
| Ares Capital |
Federated Premier and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Ares Capital
The main advantage of trading using opposite Federated Premier and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, Ares Capital 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 Ares Capital will offset losses from the drop in Ares Capital's long position.| Federated Premier vs. Munivest Fund | Federated Premier vs. MFS High Income | Federated Premier vs. Franklin Templeton Limited | Federated Premier vs. MFS Investment Grade |
| Ares Capital vs. MFS Investment Grade | Ares Capital vs. Eaton Vance National | Ares Capital vs. Nuveen California Select | Ares Capital vs. Federated Premier Municipal |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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