Correlation Between Federated Global and Oak Ridge

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Can any of the company-specific risk be diversified away by investing in both Federated Global and Oak Ridge 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 Oak Ridge 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 Oak Ridge Dynamic, you can compare the effects of market volatilities on Federated Global and Oak Ridge 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 Oak Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Oak Ridge.

Diversification Opportunities for Federated Global and Oak Ridge

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between FEDERATED and Oak is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Oak Ridge Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Dynamic 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Dynamic has no effect on the direction of Federated Global i.e., Federated Global and Oak Ridge go up and down completely randomly.

Pair Corralation between Federated Global and Oak Ridge

Assuming the 90 days horizon Federated Global is expected to generate 4.7 times less return on investment than Oak Ridge. But when comparing it to its historical volatility, Federated Global Allocation is 3.08 times less risky than Oak Ridge. It trades about 0.16 of its potential returns per unit of risk. Oak Ridge Dynamic is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,586  in Oak Ridge Dynamic on August 31, 2024 and sell it today you would earn a total of  135.00  from holding Oak Ridge Dynamic or generate 8.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Federated Global Allocation  vs.  Oak Ridge Dynamic

 Performance 
       Timeline  
Federated Global All 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Oak Ridge Dynamic 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Dynamic are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Federated Global and Oak Ridge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Federated Global and Oak Ridge

The main advantage of trading using opposite Federated Global and Oak Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Oak Ridge 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 Oak Ridge will offset losses from the drop in Oak Ridge's long position.
The idea behind Federated Global Allocation and Oak Ridge Dynamic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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