Correlation Between Federated Global and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Federated Global and Mid Cap 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 Mid Cap 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 Mid Cap Growth, you can compare the effects of market volatilities on Federated Global and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Mid Cap.
Diversification Opportunities for Federated Global and Mid Cap
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FEDERATED and Mid is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Federated Global i.e., Federated Global and Mid Cap go up and down completely randomly.
Pair Corralation between Federated Global and Mid Cap
Assuming the 90 days horizon Federated Global Allocation is expected to under-perform the Mid Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Global Allocation is 3.02 times less risky than Mid Cap. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Mid Cap Growth is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,323 in Mid Cap Growth on October 11, 2024 and sell it today you would lose (53.00) from holding Mid Cap Growth or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Mid Cap Growth
Performance |
| Timeline |
| Federated Global All |
| Mid Cap Growth |
Federated Global and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Mid Cap
The main advantage of trading using opposite Federated Global and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap'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 |
| Mid Cap vs. Asg Global Alternatives | Mid Cap vs. Federated Global Allocation | Mid Cap vs. Morgan Stanley Global | Mid Cap vs. Barings Global Floating |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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