Correlation Between Federated Global and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Federated Global and Mesirow Financial 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 Mesirow Financial 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 Mesirow Financial Small, you can compare the effects of market volatilities on Federated Global and Mesirow Financial 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 Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Mesirow Financial.
Diversification Opportunities for Federated Global and Mesirow Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FEDERATED and Mesirow is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small 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 Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Federated Global i.e., Federated Global and Mesirow Financial go up and down completely randomly.
Pair Corralation between Federated Global and Mesirow Financial
Assuming the 90 days horizon Federated Global Allocation is expected to generate 0.25 times more return on investment than Mesirow Financial. However, Federated Global Allocation is 3.98 times less risky than Mesirow Financial. It trades about -0.29 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about -0.24 per unit of risk. If you would invest 2,020 in Federated Global Allocation on October 12, 2024 and sell it today you would lose (74.00) from holding Federated Global Allocation or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Mesirow Financial Small
Performance |
| Timeline |
| Federated Global All |
| Mesirow Financial Small |
Federated Global and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Mesirow Financial
The main advantage of trading using opposite Federated Global and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial'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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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