Correlation Between Federated Hermes and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Federated Hermes and Federated Strategic 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 Strategic 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 Strategic Value, you can compare the effects of market volatilities on Federated Hermes and Federated Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Federated Strategic.
Diversification Opportunities for Federated Hermes and Federated Strategic
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federated and Federated is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Emerging and Federated Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic Value 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic Value has no effect on the direction of Federated Hermes i.e., Federated Hermes and Federated Strategic go up and down completely randomly.
Pair Corralation between Federated Hermes and Federated Strategic
Assuming the 90 days horizon Federated Hermes Emerging is expected to generate about the same return on investment as Federated Strategic Value. However, Federated Hermes is 1.31 times more volatile than Federated Strategic Value. It trades about 0.04 of its potential returns per unit of risk. Federated Strategic Value is currently producing about 0.05 per unit of risk. If you would invest 540.00 in Federated Strategic Value on August 30, 2024 and sell it today you would earn a total of 99.00 from holding Federated Strategic Value or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Hermes Emerging vs. Federated Strategic Value
Performance |
| Timeline |
| Federated Hermes Emerging |
| Federated Strategic Value |
Federated Hermes and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Hermes and Federated Strategic
The main advantage of trading using opposite Federated Hermes and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Hermes position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.| Federated Hermes vs. Calamos Dynamic Convertible | Federated Hermes vs. Bbh Intermediate Municipal | Federated Hermes vs. Ambrus Core Bond | Federated Hermes vs. Ultra Short Fixed Income |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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