Correlation Between Federated Short-intermedia and Ab Select
Can any of the company-specific risk be diversified away by investing in both Federated Short-intermedia and Ab Select 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 Short-intermedia and Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Intermediate Duration and Ab Select Longshort, you can compare the effects of market volatilities on Federated Short-intermedia and Ab Select 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 Short-intermedia with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-intermedia and Ab Select.
Diversification Opportunities for Federated Short-intermedia and Ab Select
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and ASCLX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Intermediate D and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Federated Short-intermedia 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 Short Intermediate Duration are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Federated Short-intermedia i.e., Federated Short-intermedia and Ab Select go up and down completely randomly.
Pair Corralation between Federated Short-intermedia and Ab Select
Assuming the 90 days horizon Federated Short-intermedia is expected to generate 8.39 times less return on investment than Ab Select. But when comparing it to its historical volatility, Federated Short Intermediate Duration is 3.8 times less risky than Ab Select. It trades about 0.16 of its potential returns per unit of risk. Ab Select Longshort is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,353 in Ab Select Longshort on September 1, 2024 and sell it today you would earn a total of 55.00 from holding Ab Select Longshort or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Federated Short Intermediate D vs. Ab Select Longshort
Performance |
| Timeline |
| Federated Short-intermedia |
| Ab Select Longshort |
Federated Short-intermedia and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-intermedia and Ab Select
The main advantage of trading using opposite Federated Short-intermedia and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-intermedia position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.The idea behind Federated Short Intermediate Duration and Ab Select Longshort 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.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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