Correlation Between Federated Premier and Princeton Capital
Can any of the company-specific risk be diversified away by investing in both Federated Premier and Princeton 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 Princeton 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 Princeton Capital, you can compare the effects of market volatilities on Federated Premier and Princeton 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 Princeton Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Princeton Capital.
Diversification Opportunities for Federated Premier and Princeton Capital
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and Princeton is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton 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 Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of Federated Premier i.e., Federated Premier and Princeton Capital go up and down completely randomly.
Pair Corralation between Federated Premier and Princeton Capital
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the Princeton Capital. But the fund apears to be less risky and, when comparing its historical volatility, Federated Premier Municipal is 9.07 times less risky than Princeton Capital. The fund trades about -0.1 of its potential returns per unit of risk. The Princeton Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Princeton Capital on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Princeton Capital or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. Princeton Capital
Performance |
| Timeline |
| Federated Premier |
| Princeton Capital |
Federated Premier and Princeton Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Princeton Capital
The main advantage of trading using opposite Federated Premier and Princeton Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, Princeton 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 Princeton Capital will offset losses from the drop in Princeton Capital's long position.| Federated Premier vs. Dws Strategic Municipal | Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
| Princeton Capital vs. Invesco High Income | Princeton Capital vs. Blackrock Muniholdings Ny | Princeton Capital vs. MFS Investment Grade | Princeton 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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