Correlation Between Federated and Federated Max-cap
Can any of the company-specific risk be diversified away by investing in both Federated and Federated Max-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 and Federated Max-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Gov Sec and Federated Max Cap Index, you can compare the effects of market volatilities on Federated and Federated Max-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 with a short position of Federated Max-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated and Federated Max-cap.
Diversification Opportunities for Federated and Federated Max-cap
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Federated is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Federated Gov Sec and Federated Max Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Max Cap and Federated 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 Gov Sec are associated (or correlated) with Federated Max-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Max Cap has no effect on the direction of Federated i.e., Federated and Federated Max-cap go up and down completely randomly.
Pair Corralation between Federated and Federated Max-cap
Assuming the 90 days horizon Federated is expected to generate 5.36 times less return on investment than Federated Max-cap. But when comparing it to its historical volatility, Federated Gov Sec is 6.4 times less risky than Federated Max-cap. It trades about 0.14 of its potential returns per unit of risk. Federated Max Cap Index is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 719.00 in Federated Max Cap Index on September 3, 2024 and sell it today you would earn a total of 87.00 from holding Federated Max Cap Index or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Gov Sec vs. Federated Max Cap Index
Performance |
| Timeline |
| Federated Gov Sec |
| Federated Max Cap |
Federated and Federated Max-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated and Federated Max-cap
The main advantage of trading using opposite Federated and Federated Max-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated position performs unexpectedly, Federated Max-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 Federated Max-cap will offset losses from the drop in Federated Max-cap's long position.| Federated vs. Eaton Vance Short | Federated vs. Vanguard Short Term Treasury | Federated vs. Vanguard Short Term Treasury | Federated vs. Vanguard Short Term Federal |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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