Correlation Between Federated Short-intermedia and Calvert Short
Can any of the company-specific risk be diversified away by investing in both Federated Short-intermedia and Calvert Short 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 Calvert Short 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 Calvert Short Duration, you can compare the effects of market volatilities on Federated Short-intermedia and Calvert Short 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 Calvert Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-intermedia and Calvert Short.
Diversification Opportunities for Federated Short-intermedia and Calvert Short
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FEDERATED and Calvert is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Intermediate D and Calvert Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Short Duration 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 Calvert Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Short Duration has no effect on the direction of Federated Short-intermedia i.e., Federated Short-intermedia and Calvert Short go up and down completely randomly.
Pair Corralation between Federated Short-intermedia and Calvert Short
Assuming the 90 days horizon Federated Short Intermediate Duration is expected to generate 1.18 times more return on investment than Calvert Short. However, Federated Short-intermedia is 1.18 times more volatile than Calvert Short Duration. It trades about 0.15 of its potential returns per unit of risk. Calvert Short Duration is currently generating about 0.07 per unit of risk. If you would invest 997.00 in Federated Short Intermediate Duration on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Federated Short Intermediate Duration or generate 0.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Federated Short Intermediate D vs. Calvert Short Duration
Performance |
Timeline |
Federated Short-intermedia |
Calvert Short Duration |
Federated Short-intermedia and Calvert Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Federated Short-intermedia and Calvert Short
The main advantage of trading using opposite Federated Short-intermedia and Calvert Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-intermedia position performs unexpectedly, Calvert Short 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 Calvert Short will offset losses from the drop in Calvert Short's long position.The idea behind Federated Short Intermediate Duration and Calvert Short Duration 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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