Correlation Between Federated Premier and Pacific Valley
Can any of the company-specific risk be diversified away by investing in both Federated Premier and Pacific Valley 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 Pacific Valley 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 Pacific Valley Bank, you can compare the effects of market volatilities on Federated Premier and Pacific Valley 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 Pacific Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Pacific Valley.
Diversification Opportunities for Federated Premier and Pacific Valley
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federated and Pacific is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Pacific Valley Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Valley Bank 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 Pacific Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Valley Bank has no effect on the direction of Federated Premier i.e., Federated Premier and Pacific Valley go up and down completely randomly.
Pair Corralation between Federated Premier and Pacific Valley
Considering the 90-day investment horizon Federated Premier is expected to generate 1.9 times less return on investment than Pacific Valley. But when comparing it to its historical volatility, Federated Premier Municipal is 2.16 times less risky than Pacific Valley. It trades about 0.04 of its potential returns per unit of risk. Pacific Valley Bank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 864.00 in Pacific Valley Bank on August 25, 2024 and sell it today you would earn a total of 59.00 from holding Pacific Valley Bank or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.52% |
| Values | Daily Returns |
Federated Premier Municipal vs. Pacific Valley Bank
Performance |
| Timeline |
| Federated Premier |
| Pacific Valley Bank |
Federated Premier and Pacific Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Pacific Valley
The main advantage of trading using opposite Federated Premier and Pacific Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, Pacific Valley 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 Pacific Valley will offset losses from the drop in Pacific Valley'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 |
| Pacific Valley vs. Invesco High Income | Pacific Valley vs. Blackrock Muniholdings Ny | Pacific Valley vs. MFS Investment Grade | Pacific Valley 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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