Correlation Between Federated Hermes and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Kaufmann 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 Kaufmann 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 Kaufmann Large, you can compare the effects of market volatilities on Federated Hermes and Federated Kaufmann 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 Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Kaufmann.
Diversification Opportunities for Federated Hermes and Federated Kaufmann
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Emerging and Federated Kaufmann Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Large 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 Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Large has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Kaufmann
Assuming the 90 days horizon Federated Hermes Emerging is expected to under-perform the Federated Kaufmann. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Hermes Emerging is 1.18 times less risky than Federated Kaufmann. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Federated Kaufmann Large is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,872 in Federated Kaufmann Large on October 21, 2024 and sell it today you would earn a total of 11.00 from holding Federated Kaufmann Large or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Emerging vs. Federated Kaufmann Large
Performance |
| Timeline |
| Federated Hermes Emerging |
| Federated Kaufmann Large |
Federated Hermes and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Kaufmann
The main advantage of trading using opposite Federated Hermes and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Kaufmann 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 Kaufmann will offset losses from the drop in Federated Kaufmann's long position.| Federated Hermes vs. Victory Rs Partners | Federated Hermes vs. Eip Growth And | Federated Hermes vs. Vy Franklin Income | Federated Hermes vs. Tax Managed Large Cap |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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