Correlation Between Federated and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Federated and Federated Strategic 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 Strategic 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 Strategic Income, you can compare the effects of market volatilities on Federated and Federated Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated and Federated Strategic.
Diversification Opportunities for Federated and Federated Strategic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Federated and Federated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Federated Gov Sec and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Federated i.e., Federated and Federated Strategic go up and down completely randomly.
Pair Corralation between Federated and Federated Strategic
Assuming the 90 days horizon Federated is expected to generate 2.67 times less return on investment than Federated Strategic. But when comparing it to its historical volatility, Federated Gov Sec is 2.1 times less risky than Federated Strategic. It trades about 0.11 of its potential returns per unit of risk. Federated Strategic Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 751.00 in Federated Strategic Income on August 26, 2024 and sell it today you would earn a total of 78.00 from holding Federated Strategic Income or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Gov Sec vs. Federated Strategic Income
Performance |
| Timeline |
| Federated Gov Sec |
| Federated Strategic |
Federated and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated and Federated Strategic
The main advantage of trading using opposite Federated and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated position performs unexpectedly, Federated Strategic 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 Strategic will offset losses from the drop in Federated Strategic's long position.| Federated vs. Federated Emerging Market | Federated vs. Federated Mdt Balanced | Federated vs. Federated Global Allocation | Federated vs. Federated Hermes Emerging |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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