Correlation Between Federated Floating and Federated Government
Can any of the company-specific risk be diversified away by investing in both Federated Floating 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 Floating 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 Floating Rate and Federated Government Income, you can compare the effects of market volatilities on Federated Floating 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 Floating with a short position of Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Floating and Federated Government.
Diversification Opportunities for Federated Floating and Federated Government
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federated and Federated is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Federated Floating Rate 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 Floating 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 Floating Rate 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 Floating i.e., Federated Floating and Federated Government go up and down completely randomly.
Pair Corralation between Federated Floating and Federated Government
Assuming the 90 days horizon Federated Floating Rate is expected to generate 0.31 times more return on investment than Federated Government. However, Federated Floating Rate is 3.23 times less risky than Federated Government. It trades about 0.2 of its potential returns per unit of risk. Federated Government Income is currently generating about 0.01 per unit of risk. If you would invest 747.00 in Federated Floating Rate on September 5, 2024 and sell it today you would earn a total of 121.00 from holding Federated Floating Rate or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Floating Rate vs. Federated Government Income
Performance |
| Timeline |
| Federated Floating Rate |
| Federated Government |
Federated Floating and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Floating and Federated Government
The main advantage of trading using opposite Federated Floating and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Floating 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 Floating vs. Siit Global Managed | Federated Floating vs. Mirova Global Green | Federated Floating vs. Artisan Global Unconstrained | Federated Floating vs. Nationwide Global Equity |
| Federated Government vs. Baird Smallmid Cap | Federated Government vs. Oklahoma College Savings | Federated Government vs. Champlain Small | Federated Government vs. The Hartford Small |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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