Correlation Between Federated Premier and PSB Holdings
Can any of the company-specific risk be diversified away by investing in both Federated Premier and PSB Holdings 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 PSB Holdings 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 PSB Holdings, you can compare the effects of market volatilities on Federated Premier and PSB Holdings 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 PSB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and PSB Holdings.
Diversification Opportunities for Federated Premier and PSB Holdings
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and PSB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings 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 PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Federated Premier i.e., Federated Premier and PSB Holdings go up and down completely randomly.
Pair Corralation between Federated Premier and PSB Holdings
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the PSB Holdings. But the fund apears to be less risky and, when comparing its historical volatility, Federated Premier Municipal is 1.47 times less risky than PSB Holdings. The fund trades about -0.14 of its potential returns per unit of risk. The PSB Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,600 in PSB Holdings on August 26, 2024 and sell it today you would earn a total of 190.00 from holding PSB Holdings or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. PSB Holdings
Performance |
| Timeline |
| Federated Premier |
| PSB Holdings |
Federated Premier and PSB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and PSB Holdings
The main advantage of trading using opposite Federated Premier and PSB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, PSB Holdings 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 PSB Holdings will offset losses from the drop in PSB Holdings' 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 |
| PSB Holdings vs. Invesco High Income | PSB Holdings vs. Blackrock Muniholdings Ny | PSB Holdings vs. MFS Investment Grade | PSB Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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