Correlation Between Federated Short-term and Federated Floating
Can any of the company-specific risk be diversified away by investing in both Federated Short-term and Federated Floating 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 Floating 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 Floating Rate, you can compare the effects of market volatilities on Federated Short-term and Federated Floating 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 Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Short-term and Federated Floating.
Diversification Opportunities for Federated Short-term and Federated Floating
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between FEDERATED and Federated is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federated Short Term Income and Federated Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Floating Rate 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 Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Floating Rate has no effect on the direction of Federated Short-term i.e., Federated Short-term and Federated Floating go up and down completely randomly.
Pair Corralation between Federated Short-term and Federated Floating
Assuming the 90 days horizon Federated Short-term is expected to generate 1.48 times less return on investment than Federated Floating. In addition to that, Federated Short-term is 1.01 times more volatile than Federated Floating Rate. It trades about 0.13 of its total potential returns per unit of risk. Federated Floating Rate is currently generating about 0.2 per unit of volatility. If you would invest 747.00 in Federated Floating Rate on September 3, 2024 and sell it today you would earn a total of 121.00 from holding Federated Floating Rate or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Short Term Income vs. Federated Floating Rate
Performance |
| Timeline |
| Federated Short Term |
| Federated Floating Rate |
Federated Short-term and Federated Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Short-term and Federated Floating
The main advantage of trading using opposite Federated Short-term and Federated Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Short-term position performs unexpectedly, Federated Floating 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 Floating will offset losses from the drop in Federated Floating's long position.The idea behind Federated Short Term Income and Federated Floating Rate 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.
| Federated Floating vs. Morningstar Global Income | Federated Floating vs. Dreyfusstandish Global Fixed | Federated Floating vs. Ab Global Bond | Federated Floating vs. Qs Global Equity |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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