Correlation Between Federated Premier and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Federated Premier and Cohen Steers 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 Cohen Steers 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 Cohen Steers Total, you can compare the effects of market volatilities on Federated Premier and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Cohen Steers.
Diversification Opportunities for Federated Premier and Cohen Steers
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Cohen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Cohen Steers Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Total 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Total has no effect on the direction of Federated Premier i.e., Federated Premier and Cohen Steers go up and down completely randomly.
Pair Corralation between Federated Premier and Cohen Steers
Considering the 90-day investment horizon Federated Premier is expected to generate 1.33 times less return on investment than Cohen Steers. But when comparing it to its historical volatility, Federated Premier Municipal is 1.88 times less risky than Cohen Steers. It trades about 0.04 of its potential returns per unit of risk. Cohen Steers Total is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,037 in Cohen Steers Total on November 1, 2024 and sell it today you would earn a total of 152.00 from holding Cohen Steers Total or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. Cohen Steers Total
Performance |
| Timeline |
| Federated Premier |
| Cohen Steers Total |
Federated Premier and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Cohen Steers
The main advantage of trading using opposite Federated Premier and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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