Correlation Between Federated Global and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both Federated Global and Federated Institutional 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 Institutional 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 Institutional High, you can compare the effects of market volatilities on Federated Global and Federated Institutional 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 Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Global and Federated Institutional.
Diversification Opportunities for Federated Global and Federated Institutional
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 Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional 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 Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of Federated Global i.e., Federated Global and Federated Institutional go up and down completely randomly.
Pair Corralation between Federated Global and Federated Institutional
Assuming the 90 days horizon Federated Global Allocation is expected to generate 3.46 times more return on investment than Federated Institutional. However, Federated Global is 3.46 times more volatile than Federated Institutional High. It trades about 0.34 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.13 per unit of risk. If you would invest 2,026 in Federated Global Allocation on September 4, 2024 and sell it today you would earn a total of 67.00 from holding Federated Global Allocation or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Federated Global Allocation vs. Federated Institutional High
Performance |
| Timeline |
| Federated Global All |
| Federated Institutional |
Federated Global and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Global and Federated Institutional
The main advantage of trading using opposite Federated Global and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Global position performs unexpectedly, Federated Institutional 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 Institutional will offset losses from the drop in Federated Institutional's long position.| Federated Global vs. Northern Small Cap | Federated Global vs. The Gabelli Small | Federated Global vs. Tax Managed Mid Small | Federated Global vs. Blackrock Sm Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |