Correlation Between Federated Premier and CreditRiskMonitor
Can any of the company-specific risk be diversified away by investing in both Federated Premier and CreditRiskMonitor 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 CreditRiskMonitor 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 CreditRiskMonitorCom, you can compare the effects of market volatilities on Federated Premier and CreditRiskMonitor 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 CreditRiskMonitor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and CreditRiskMonitor.
Diversification Opportunities for Federated Premier and CreditRiskMonitor
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federated and CreditRiskMonitor is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and CreditRiskMonitorCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CreditRiskMonitorCom 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 CreditRiskMonitor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CreditRiskMonitorCom has no effect on the direction of Federated Premier i.e., Federated Premier and CreditRiskMonitor go up and down completely randomly.
Pair Corralation between Federated Premier and CreditRiskMonitor
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the CreditRiskMonitor. But the fund apears to be less risky and, when comparing its historical volatility, Federated Premier Municipal is 5.63 times less risky than CreditRiskMonitor. The fund trades about -0.03 of its potential returns per unit of risk. The CreditRiskMonitorCom is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 269.00 in CreditRiskMonitorCom on September 1, 2024 and sell it today you would earn a total of 76.00 from holding CreditRiskMonitorCom or generate 28.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. CreditRiskMonitorCom
Performance |
| Timeline |
| Federated Premier |
| CreditRiskMonitorCom |
Federated Premier and CreditRiskMonitor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and CreditRiskMonitor
The main advantage of trading using opposite Federated Premier and CreditRiskMonitor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, CreditRiskMonitor 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 CreditRiskMonitor will offset losses from the drop in CreditRiskMonitor's long position.| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free | Federated Premier vs. Aquagold International |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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