Correlation Between Federated Global and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both Federated Global and Absolute Capital 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 Global and Absolute Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Global Allocation and Absolute Capital Asset, you can compare the effects of market volatilities on Federated Global and Absolute Capital 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 Global with a short position of Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Absolute Capital.
Diversification Opportunities for Federated Global and Absolute Capital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Absolute is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset and Federated Global 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 Global Allocation are associated (or correlated) with Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Federated Global i.e., Federated Global and Absolute Capital go up and down completely randomly.
Pair Corralation between Federated Global and Absolute Capital
Assuming the 90 days horizon Federated Global is expected to generate 1.03 times less return on investment than Absolute Capital. But when comparing it to its historical volatility, Federated Global Allocation is 1.34 times less risky than Absolute Capital. It trades about 0.3 of its potential returns per unit of risk. Absolute Capital Asset is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,148 in Absolute Capital Asset on November 2, 2024 and sell it today you would earn a total of 39.00 from holding Absolute Capital Asset or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Absolute Capital Asset
Performance |
| Timeline |
| Federated Global All |
| Absolute Capital Asset |
Federated Global and Absolute Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Absolute Capital
The main advantage of trading using opposite Federated Global and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.| Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Fund | Federated Global vs. Federated Strategic Income | Federated Global vs. Federated Bond Fund |
| Absolute Capital vs. Dws Global Macro | Absolute Capital vs. Barings Global Floating | Absolute Capital vs. Asg Global Alternatives | Absolute Capital vs. Mirova Global Green |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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