Correlation Between Federated Short-term and Federated High
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Federated High 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 Federated High 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 Federated High Income, you can compare the effects of market volatilities on Federated Short-term and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Federated High.
Diversification Opportunities for Federated Short-term and Federated High
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Federated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Federated High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Income 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 Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Income has no effect on the direction of Federated Short-term i.e., Federated Short-term and Federated High go up and down completely randomly.
Pair Corralation between Federated Short-term and Federated High
Assuming the 90 days horizon Federated Short-term is expected to generate 3.11 times less return on investment than Federated High. But when comparing it to its historical volatility, Federated Short Term Income is 1.38 times less risky than Federated High. It trades about 0.1 of its potential returns per unit of risk. Federated High Income is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 679.00 in Federated High Income on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Federated High Income or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Federated High Income
Performance |
| Timeline |
| Federated Short Term |
| Federated High Income |
Federated Short-term and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Federated High
The main advantage of trading using opposite Federated Short-term and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Federated High 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 High will offset losses from the drop in Federated High's long position.| Federated Short-term vs. Bbh Partner Fund | Federated Short-term vs. Scharf Global Opportunity | Federated Short-term vs. Arrow Managed Futures | Federated Short-term vs. Fa 529 Aggressive |
| Federated High vs. Siit High Yield | Federated High vs. Ab High Income | Federated High vs. Needham Aggressive Growth | Federated High vs. Artisan High Income |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |