Correlation Between Federated Max and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Federated Max and Vanguard Total 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 Max and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Max Cap Index and Vanguard Total Stock, you can compare the effects of market volatilities on Federated Max and Vanguard Total 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 Max with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Max and Vanguard Total.
Diversification Opportunities for Federated Max and Vanguard Total
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Vanguard is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Federated Max Cap Index and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Federated Max 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 Max Cap Index are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Federated Max i.e., Federated Max and Vanguard Total go up and down completely randomly.
Pair Corralation between Federated Max and Vanguard Total
Assuming the 90 days horizon Federated Max is expected to generate 2.63 times less return on investment than Vanguard Total. In addition to that, Federated Max is 1.58 times more volatile than Vanguard Total Stock. It trades about 0.03 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.11 per unit of volatility. If you would invest 10,783 in Vanguard Total Stock on September 12, 2024 and sell it today you would earn a total of 3,786 from holding Vanguard Total Stock or generate 35.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Max Cap Index vs. Vanguard Total Stock
Performance |
| Timeline |
| Federated Max Cap |
| Vanguard Total Stock |
Federated Max and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Max and Vanguard Total
The main advantage of trading using opposite Federated Max and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Max position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Federated Max vs. Vanguard Total Stock | Federated Max vs. Vanguard 500 Index | Federated Max vs. Vanguard Total Stock | Federated Max vs. Vanguard Total Stock |
| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard 500 Index | Vanguard Total vs. Vanguard Reit Index |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |