Correlation Between Federated Global and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Federated Global and Federated Hermes 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 Federated Hermes 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 Federated Hermes Sdg, you can compare the effects of market volatilities on Federated Global and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Federated Hermes.
Diversification Opportunities for Federated Global and Federated Hermes
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Federated Hermes Sdg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Sdg 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Sdg has no effect on the direction of Federated Global i.e., Federated Global and Federated Hermes go up and down completely randomly.
Pair Corralation between Federated Global and Federated Hermes
Assuming the 90 days horizon Federated Global is expected to generate 1.19 times less return on investment than Federated Hermes. But when comparing it to its historical volatility, Federated Global Allocation is 1.71 times less risky than Federated Hermes. It trades about 0.08 of its potential returns per unit of risk. Federated Hermes Sdg is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,180 in Federated Hermes Sdg on September 1, 2024 and sell it today you would earn a total of 291.00 from holding Federated Hermes Sdg or generate 24.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Global Allocation vs. Federated Hermes Sdg
Performance |
| Timeline |
| Federated Global All |
| Federated Hermes Sdg |
Federated Global and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Federated Hermes
The main advantage of trading using opposite Federated Global and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Federated Global vs. Federated Total Return | Federated Global vs. Federated Max Cap Index | Federated Global vs. Federated Kaufmann Small | Federated Global vs. Federated U S |
| Federated Hermes vs. Dws Government Money | Federated Hermes vs. John Hancock Money | Federated Hermes vs. Transamerica Funds | Federated Hermes vs. Pimco Funds |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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