Correlation Between Federated Short-term and Baron Real
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Baron Real 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-term and Baron Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Short Term Income and Baron Real Estate, you can compare the effects of market volatilities on Federated Short-term and Baron Real 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-term with a short position of Baron Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Baron Real.
Diversification Opportunities for Federated Short-term and Baron Real
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FEDERATED and Baron is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Baron Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Real Estate and Federated Short-term 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 Term Income are associated (or correlated) with Baron Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Real Estate has no effect on the direction of Federated Short-term i.e., Federated Short-term and Baron Real go up and down completely randomly.
Pair Corralation between Federated Short-term and Baron Real
Assuming the 90 days horizon Federated Short-term is expected to generate 51.98 times less return on investment than Baron Real. But when comparing it to its historical volatility, Federated Short Term Income is 8.39 times less risky than Baron Real. It trades about 0.05 of its potential returns per unit of risk. Baron Real Estate is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,670 in Baron Real Estate on September 3, 2024 and sell it today you would earn a total of 104.00 from holding Baron Real Estate or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Baron Real Estate
Performance |
| Timeline |
| Federated Short Term |
| Baron Real Estate |
Federated Short-term and Baron Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Baron Real
The main advantage of trading using opposite Federated Short-term and Baron Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Baron Real 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 Baron Real will offset losses from the drop in Baron Real's long position.The idea behind Federated Short Term Income and Baron Real Estate 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.
| Baron Real vs. Federated Short Term Income | Baron Real vs. Astor Longshort Fund | Baron Real vs. Angel Oak Ultrashort | Baron Real vs. Sterling Capital Short |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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