Correlation Between Federated Premier and Somerset Trust
Can any of the company-specific risk be diversified away by investing in both Federated Premier and Somerset Trust 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 Somerset Trust 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 Somerset Trust Holding, you can compare the effects of market volatilities on Federated Premier and Somerset Trust 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 Somerset Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Somerset Trust.
Diversification Opportunities for Federated Premier and Somerset Trust
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federated and Somerset is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and Somerset Trust Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somerset Trust Holding 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 Somerset Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somerset Trust Holding has no effect on the direction of Federated Premier i.e., Federated Premier and Somerset Trust go up and down completely randomly.
Pair Corralation between Federated Premier and Somerset Trust
Considering the 90-day investment horizon Federated Premier Municipal is expected to under-perform the Somerset Trust. But the fund apears to be less risky and, when comparing its historical volatility, Federated Premier Municipal is 2.94 times less risky than Somerset Trust. The fund trades about 0.0 of its potential returns per unit of risk. The Somerset Trust Holding is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,150 in Somerset Trust Holding on August 29, 2024 and sell it today you would earn a total of 339.00 from holding Somerset Trust Holding or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. Somerset Trust Holding
Performance |
| Timeline |
| Federated Premier |
| Somerset Trust Holding |
Federated Premier and Somerset Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Somerset Trust
The main advantage of trading using opposite Federated Premier and Somerset Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, Somerset Trust 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 Somerset Trust will offset losses from the drop in Somerset Trust's long position.| Federated Premier vs. Gabelli Global Small | Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance National | Federated Premier vs. GAMCO Natural Resources |
| Somerset Trust vs. Potomac Bancshares | Somerset Trust vs. Apollo Bancorp | Somerset Trust vs. The Farmers Bank | Somerset Trust vs. 1ST SUMMIT BANCORP |
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 CEOs Directory module to screen CEOs from public companies around the world.
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