Correlation Between Federated Hermes and Federated Government
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Government 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 Hermes and Federated Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Emerging and Federated Government Income, you can compare the effects of market volatilities on Federated Hermes and Federated Government 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 Hermes with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Government.
Diversification Opportunities for Federated Hermes and Federated Government
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Federated is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Emerging and Federated Government Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government and Federated Hermes 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 Hermes Emerging are associated (or correlated) with Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Government go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Government
Assuming the 90 days horizon Federated Hermes Emerging is expected to generate 2.95 times more return on investment than Federated Government. However, Federated Hermes is 2.95 times more volatile than Federated Government Income. It trades about 0.15 of its potential returns per unit of risk. Federated Government Income is currently generating about 0.07 per unit of risk. If you would invest 1,520 in Federated Hermes Emerging on November 2, 2024 and sell it today you would earn a total of 44.00 from holding Federated Hermes Emerging or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Federated Hermes Emerging vs. Federated Government Income
Performance |
| Timeline |
| Federated Hermes Emerging |
| Federated Government |
Federated Hermes and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Government
The main advantage of trading using opposite Federated Hermes and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Federated Hermes vs. Federated Emerging Market | Federated Hermes vs. Federated Mdt All | Federated Hermes vs. Federated Mdt Balanced | Federated Hermes vs. Federated Global Allocation |
| Federated Government vs. Cref Inflation Linked Bond | Federated Government vs. Short Duration Inflation | Federated Government vs. Asg Managed Futures | Federated Government vs. Credit Suisse Multialternative |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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